Microsoft’s annual earnings report states the next-gen Xbox One, since its release in last November, has lost the company over $400 million. Most of the loss was brought by the increase in production costs and advertising.
According to the earnings report, Microsoft has sold “11.7 million Xbox consoles during fiscal year 2014 compared with 9.8 million Xbox consoles during fiscal year 2013”, resulting in $1.7 billion revenue from consoles in the 2014 fiscal year, an increase of 34% from last year.
Nevertheless, the reported earnings were offset by the $2.1 billion that Microsoft had to spend to cover higher costs associated with Xbox One, as well as by a decrease in sales of company’s previous console, Xbox 360.
Earlier this year, Microsoft’s gaming console was reported to be falling behind its main competitor, PlayStation 4, when it came to sales. According to Forbes, early 2014 results showed that Xbox One is selling only half the rate that Sony’s PlayStation 4 is.
However, Sony doesn’t have a reason to be pleased either. It has lost money for four years straight, since 2008 to 2012, and was scarcely able to gain any profits in 2013.
The gaming consoles isn’t the only hardware project that seems to be bringing losses for Microsoft. Since the launch of the Surface tablet hybrids two years ago, even though the product line has improved throughout its life, it never took off and the company lost $1.73 billion on it.
Written by Aleksandr Ančiutin