Microsoft's Entertainment and Devices Division (EDD) – responsible for everything from the Xbox 360 to the Zune – has once again posted a net quarterly profit. What's behind the good news? "Xbox platform and PC game revenue increased $418 million or 85% primarily as a result of increased Xbox 360 console sales, Xbox 360 video game sales, and Xbox Live revenue."

Revenues are great and all, but what about profit? The EDD posted an operating profit of $89 million for the third fiscal quarter, and an operating income of $614 million for the nine-month period (a marked improvement from the $746 million loss during the same period last year). Just in case you're worrying that it can't keep it up, Microsoft expects fourth quarter revenue to increase "due to increased sales of Xbox 360 consoles and related games, accessories, and services." These things come in threes, right?

In the last six years, there's been one constant when discussing Microsoft's foray into the strange and seductive world of video game console manufacturing: they had yet to turn a profit on any of it. No more, with today's announcement of Microsoft's second quarter earnings which showed a relatively impressive six-month income of $524 million (compared to a $423m loss during the same period last year) from the the Xbox's Entertainment and Devices Division.

Before you go thinking that was all thanks to the Zune and PC game sales, the company's 10-Q filing states that the EDD's increased revenue was "primarily due to increased Xbox 360 platform sales." During the last six months they say Xbox platform and PC game revenue increased 35% as a result of "increased Xbox 360 console sales, video game sales led by Halo 3, Xbox Live revenues, and Xbox 360 accessory sales." (Sounds like EDD bossman Robbie Bach nailed it).

The 6.1 million Xbox 360 consoles and 4.82 million copies of Halo 3 sold in the first half of fiscal '08 sure helped, but so did "decreased Xbox 360 manufacturing costs" and "a decline in Xbox 360 platform marketing expenses" – it's costing less to build them and less to promote the brand. But they'll need to hold on far longer than one quarter to make their sojourn into the living rooms of America worthwhile; for the rest of fiscal '08 they "expect revenue to increase due to increased sales of Xbox 360 consoles and related games, accessories, and services." Yup, that sounds about right.

[Via GameDaily]

Further cementing its image as Microsoft's loser brother who just needs a few bucks until "the band really takes off," the Entertainment and Devices Division of the company lost $315 million in the third fiscal quarter. Meanwhile, Microsoft's overall earnings rocketed up to $14.4 billion, a 32 percent jump from last year, thanks to the release of Vista.

Revenue for the EDD (Zune, Xbox 360, PC gaming, etc.) also took a hit, dropping from $1.2 billion this same time last year to $929 million, a 22 percent change. Microsoft blames the loss on lower Xbox 360 sales, which seems pretty logical, seeing as the console has some new competition this year. They estimate shipments of 500,000 consoles this quarter, compared with 1.7 million in Q3 2006. Revenue in games also dropped on the PC and 360 by 44 percent, or around $393 million.

On the plus side, EDD losses were an improvement from $402 million last year, which is sort of like earning $87 million! Or at least that's what EDD tells Mrs. Microsoft as she stands in the living room just out of the children's sight, nervously watching her husband peel off $20s. "I just need something to get me through the weekend. I'm seeing a new girl and I just want to show her a good time," EDD says, the faintest hint of whiskey on his breath. "I swear, Angela, I'm going to be profitable in fiscal '08, you'll see, you'll all see!"

Read -- Microsoft Reports Record Profits (press release)
Read -- Q3 Revenue at Xbox Division Falls on Slow 360 Sales (GameDaily BIZ)