Bloomberg states that "Microsoft expects to sell 4.5 million
to 5.5 million of the Xbox 360 consoles in fiscal 2006 [from the beginning of July of this year to the end of June
in 2006]." Analysts had expected closer to 6 million consoles to be sold during that time, with a shortage clearly
"through the end of the March quarter."
Not only that, the Home and Entertainment division of Microsoft, which includes the Xbox and upcoming Xbox 360, "was
the only division in the company to perform worse this quarter than for the same quarter last year," referring to the
first quarter of fiscal year 2006 [via GameSpot]. Granted,
the huge settlement with Real hurt operating income and
earnings per share, but console-generation transition-induced sales dips and 360 launch expenses likely contributed
detrimental effects on MS's bottom line as well.
Underestimating 360 sales could be a conservative move on Microsoft's part in light of system supply concerns, but the
Xbox division should see greener fiscal pastures if it doesn't lose as much money on 360 hardware as it still does with
the original Xbox this generation. It is interesting how the financial situation is reversed with Sony, where its
gaming division provides the bright spot in its corporate portfolio, while the rest of Microsoft's software business
has shored up the Home and Entertainment losses up to this point.
[Thanks, Anand]
Xbox division lags in MS quarterly report; 360 sales expectations lowered?
by Dan Choi 
on Oct 28th 2005 8:00AM
10
Reader Comments (10)
Posted: Dec 18th 2005 9:37PM (Unverified) said
Come on, did you listen to the call. What they said was that original Xbox sales were weak in the latest quarter, as both supply and demand were weak. Also, to anyone familiar with the story, 4-4.5 million in exactly what MSFT said the last time they talked about the 360.
Finally, and something your excelent review neglected to include is the MSFT will flow units in a more even patern after release. So if you don't get one in the first round (Nov 22), a second round is not 3 months away, rather 3 weeks away. Further, MSFT said specifically on the call they would not go into detail about the 360, and that one should expect a seperate release about units, etc, closer to the release date.
Reply
Finally, and something your excelent review neglected to include is the MSFT will flow units in a more even patern after release. So if you don't get one in the first round (Nov 22), a second round is not 3 months away, rather 3 weeks away. Further, MSFT said specifically on the call they would not go into detail about the 360, and that one should expect a seperate release about units, etc, closer to the release date.
Posted: Dec 18th 2005 9:37PM (Unverified) said
erm..hang on, sales start (on average) at the start of Dec 2005. Fiscal year (as you state) ends June 2006 - that's 7 months.
12/7*5.5=9.4m in 12 months - easily 10m in 12-16 months.
Reply
12/7*5.5=9.4m in 12 months - easily 10m in 12-16 months.
Posted: Dec 18th 2005 9:37PM (Unverified) said
Ah, I see... I was calculating from October instead of July. Sorry about that, folks. I'll compare the official MS expectations to those of the analysts cited then. Thanks for the good eye(s)!
Reply
Posted: Dec 18th 2005 9:37PM (Unverified) said
"Come on, did you listen to the call. What they said was that original Xbox sales were weak in the latest quarter, as both supply and demand were weak."
Sorry, Chris, I was simply reporting what Bloomberg and GameSpot had to say about the matter(s). Still, if original Xbox sales were weak in the first quarter, surely some part of that had to do with the transition to the 360 this fall (on the supply side), and consumer anticipation of the next console generation (on the demand side)? Regardless of what Microsoft said during their call, wouldn't these conclusions be reasonable from a sales point of view?
Reply
Sorry, Chris, I was simply reporting what Bloomberg and GameSpot had to say about the matter(s). Still, if original Xbox sales were weak in the first quarter, surely some part of that had to do with the transition to the 360 this fall (on the supply side), and consumer anticipation of the next console generation (on the demand side)? Regardless of what Microsoft said during their call, wouldn't these conclusions be reasonable from a sales point of view?
Posted: Dec 18th 2005 9:37PM (Unverified) said
"Microsoft expects to sell 4.5 million to 5.5 million of the Xbox 360 consoles in fiscal 2006 [from the beginning of July of this year to the end of June in 2006].” It’s a slightly smaller figure (for about 10 months of 360 sales) when compared to the 10 million posed by Peter Moore for the 12 to 16 months after launch."
the main point that i think toy messed was they expect to sell 4.5 in the first 7 months if this carrie son at this rate thorugh the year they could very well be at the quoted 10m in 16 months ie april 2007
especially concidering the wave of bundles that will come out for gears of war then halo3
Reply
the main point that i think toy messed was they expect to sell 4.5 in the first 7 months if this carrie son at this rate thorugh the year they could very well be at the quoted 10m in 16 months ie april 2007
especially concidering the wave of bundles that will come out for gears of war then halo3
Posted: Dec 18th 2005 9:37PM (Unverified) said
#2 do you not understand how the fiscal year thing works?
Reply
Posted: Dec 18th 2005 9:37PM (Unverified) said
Funny, SONY also had heavy losses with the PS3 development that was reported.
Reply
Posted: Dec 18th 2005 9:37PM (Unverified) said
Dan, the title says, "360 sales expectations lower". My point is that in no way did MSFT say that on the call. Xbox, not Xbox360 sales lagged, as people opted not to buy in front of the pending release of the 360. Sales also lagged, as the supply was limited as MSFT ceased manufacturing of the units during the quarter. If anytyhing, demand is greater than MSFT expected for the 360, and the CFO noted they will not be able to meet initial demand..
Reply
Posted: Dec 18th 2005 9:37PM (Unverified) said
Well, you have to understand that I'm not disputing what Microsoft did or did not say on a conference call. But even if MS is sticking to numbers it previously announced, in the words of the analyst quoted in the Bloomberg article: "It's clear there will be a shortage through the end of the March quarter. People will have to adjust numbers down on Xbox 360." So the expectations of this analyst and others like him will naturally be lowered (on account of what Microsoft has said). It is because MS will not apparently be able to meet demand -- to the level expected from certain financial analysts -- that their expectations for the estimates of 360 sales will go down. Sorry if that wasn't made completely clear in the original post.
Reply
Posted: Dec 18th 2005 9:37PM (Unverified) said
@chris. it's not demand that will lower sales, it's supply. greater than expected supply shortage=smaller sales...it does NOT, however, tell us anything about profit or microsoft's ability to sustain demand, which are, last time i checked, the best barometers of a product's continued success.
Reply
Sorry, you must be logged in to leave a comment.
Featured Stories
The most popular posts
in the last 7 days
- Vita 'UMD Passport' won't be offered in US 220 comments
- Kingdoms of Amalur: Reckoning review: A tempting fate 153 comments
- David Jaffe leaves Eat Sleep Play, layoffs hit developer [Update] 107 comments
- Don't call it a remake: Final Fantasy X is a 'remaster,' to be clear 95 comments
- Battleship movie adapted into FPS by Double Helix 93 comments
