Microsoft Confident of Xbox 360 Unit Goals

By Geoff Duncan October 27, 2006

Reporting its financial results for its first fiscal quarter of 2007, Microsoft stated that it has shipped six million units of its Xbox 360 gaming console and, in an audio webcast, Microsoft senior VP Chris Liddell said the company is still “confident” it can meet its earlier goal to ship 10 million Xbox 360 systems by the end of the 2006 calendar year.

The entire gaming industry anticipates a surge in sales leading up to the end-of-year holidays; Microsoft’s Xbox 360 system has the cache of having been the only “next-generation” video game console on the market through 2006; however, it will be joined this November by both Sony’s PlayStation 3 and Nintendo’s Wii.

Microsoft’s financials also revealed the company is gradually curtailing the losses incurred in Xbox 360 manufacturing: the company’s entertainment and devices division (which includes the Xbox 360 as well as the forthcoming Zune handheld media player) lost $96 million during the first fiscal quarter, down from $173 million a year ago. Liddell noted that the company continues to reduce the manufacturing cost of the Xbox 360 console, so Microsoft’s loss on each unit sold is getting smaller as shipping volume and manufacturing experience both increase.

Video game console makers often take a loss on the manufacture and sale of new gaming systems, hoping to earn money back (and turn a profit) on game sales and, eventually, on sales of the consoles themselves as manufacturing costs fall.

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