Xbox One Has Raked Up A $400 Million Loss For Microsoft in 8 Months

By Akash KJ | Small Business

Even though Microsoft's Xbox 360 and Xbox One have managed to sell in large numbers, the division has almost never made money for the company in the past.

Now Microsoft has just announced that after being on the market for a little over eight months, the Xbox One has lost the company $400m (€298m, £238m).

"Computing and Gaming Hardware revenue increased $3.2 billion or 49%, primarily due to higher revenue from the Xbox Platform and Surface," Microsoft's report said. "Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One, which was released in November 2013, offset in part by a decrease in sales of Xbox 360.

"We sold 11.7 million Xbox consoles during fiscal year 2014 compared with 9.8 million Xbox consoles during fiscal year 2013. Surface revenue increased $1.3 billion or 157%, due mainly to a higher number of devices and accessories sold," Microsoft's report said.

"Computing and Gaming Hardware gross margin decreased slightly, due to a $3.2 billion or 59% increase in cost of revenue, offset in part by higher revenue. Xbox Platform cost of revenue increased $2.1 billion or 72%, due mainly to higher volumes of consoles sold and higher costs associated with Xbox One.

"Surface cost of revenue increased $970 million or 51%, due mainly to a higher number of devices and accessories sold, offset in part by a charge for Surface RT inventory adjustments of approximately $900 million in fiscal year 2013."

In simple terms, Microsoft's revenue went up by $1.7bn, but costs also shot up by $2.1bn, resulting in a loss of $400m.

The Xbox isn't the only hardware venture that's failed for Microsoft. In the nearly two years since the launch of the Surface tablet line, Microsoft has racked up $1.7 billion in losses on it.

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