MS didnt lose 400 million on the Xbox One.

#1necro00Posted 8/11/2014 8:12:50 PM
http://www.neowin.net/news/no-microsoft-hasnt-lost-400-million-on-xbox-one?utm_source=twitterfeed&utm_medium=twitter



n the past week, many articles have hit the web claiming that Microsoft lost $400 million on its relatively new Xbox One console since it launched in November. That would be an interesting fact if it weren’t completely untrue.

The stories all cite Microsoft’s recent 2014 fiscal year financial results as the source of the information, such as today’s Forbes article, though many got their incorrect interpretation of the data from a NeoGAF forum topic. What Microsoft’s financial statements actually say about its Xbox One revenue is much different than what many of the headlines are claiming.




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. … 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.

There are two key things to note about Microsoft’s statement. First, this data reflects gross margins (revenue and the cost of revenue), not overall profit or losses. Secondly, and far more importantly, these figures are not totals for the year – they represent the changes over the previous year.

What does this mean? It means Microsoft increased its total revenue from Xbox by $1.7 billion compared to the previous year, while the cost of those sales – including what it costs to manufacture consoles – increased $2.1 billion. Microsoft’s revenue in this category, $1.7 billion, is an increase of 34 percent, which means the starting figure from last year was roughly $5 billion; the $2.1 billion cost of revenue increase is a 72 percent raise, which puts its starting figure at $2.9 billion.

Adding those figures together, that means Xbox sales resulted in roughly $7.1 billion in revenues against roughly $5 billion in costs. That’s not a $400 million difference that outlets such as Forbes are citing – they obtained their erroneous figures by simply adding the yearly increases together.
#2lunaticcorePosted 8/11/2014 8:13:51 PM
Too much reading and math involved. The kids just wanna troll man.
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#3miethaPosted 8/11/2014 8:17:18 PM
It's actually even much simpler than that: there can't be "made" or "lost" numbers on it until it is in the past. As long as it is still being produced, those number WILL change. It's utterly pointless to talk about it now.
#4SPARTAN_D7Posted 8/11/2014 8:19:25 PM
I don't care enough to try and figure out if this is legit. Even if it is, this thread is already DOOMED, Doomed I say! I can hear the hooves of the ponies storming towards it as we speak.
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#5VoidBeyondPosted 8/11/2014 8:19:55 PM
SPARTAN_D7 posted...
I don't care enough to try and figure out if this is legit. Even if it is, this thread is already DOOMED, Doomed I say! I can hear the hooves of the ponies storming towards it as we speak.


Inb4 laylow
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#6billsfanno1Posted 8/11/2014 8:23:49 PM
If only the accountants and Wall St. types would just leave the bean counting to the ponies here at Gamefaqs, life wouldn't seem such an exercise in desperation for them.
#7spacejamjordanzPosted 8/11/2014 8:34:50 PM
Taking a loss up front is no big deal and expected. No cause for alarm. It's rare to turn a profit on hardware that damn quick. That loss made up over time. Software sales start rolling in, r&d goes down, and hardware gets cheaper to make over time. They will get that money back and be smooth sailing soon enough.

Not a big deal.
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#8Sith JediPosted 8/11/2014 8:39:17 PM
VoidBeyond posted...
SPARTAN_D7 posted...
I don't care enough to try and figure out if this is legit. Even if it is, this thread is already DOOMED, Doomed I say! I can hear the hooves of the ponies storming towards it as we speak.


Inb4 laylow


Can't wait for whatever completely false info and irrelevant articles he produces.
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#9TheBorderColliePosted 8/11/2014 8:43:50 PM
VoidBeyond posted...
SPARTAN_D7 posted...
I don't care enough to try and figure out if this is legit. Even if it is, this thread is already DOOMED, Doomed I say! I can hear the hooves of the ponies storming towards it as we speak.


Inb4 laylow


^^ That...

^^and That.

Let's see how long it takes before this topic gets invaded. I'm gonna say it will be by the 25th post.
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#10spacejamjordanzPosted 8/11/2014 8:44:39 PM
In case some of you didn't know, baiting is also trolling. You're no better if you keep up that behavior.
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