Microsoft's Gaming Gamble Paying Off

By Colleen Taylor, GigaOM

Despite their commercial appeal, gaming consoles have not historically been big moneymakers for the tech industry's biggest firms. Sony's PlayStation business was famously unprofitable for years, as was Microsoft's entertainment and devices division anchored by the Xbox. But if the past several months is any lasting indication, the gaming market's tide may finally have turned for good.

Microsoft reported Thursday that its entertainment and devices division (EDD) revenue grew 45% during fiscal 2011, with profits from the division surging 114%. And the growth is apparently speeding up; during the company's fourth quarter, which ended June 30, EDD revenues were 30% higher than they had been during the same quarter last year.

Microsoft's EDD division covers the Xbox 360 entertainment platform (which includes Kinect for xBox 360), Internet protocol television software Mediaroom, and the Windows Phone. In the recent quarter, the EDD's revenue increase was mostly attributable to sales growth in the xBox 360 platform business, the company said.

The Xbox division was cited as a significant contributing factor to Microsoft's overall growth over the past year, the company said in a press release accompanying its earnings announcement. That in itself signifies quite a turnaround from the gaming console's notoriously loss-making history.

Microsoft is not the only tech giant to see its gaming console division come out of the red recently. In May, Sony announced that it had finally started making money from its PlayStation business after years of financial losses. If the latest performance numbers can last for the longer term, gaming consoles may actually prove that the old axiom "patience is a virtue" can even be applied to today's fast-paced tech world.

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http://gigaom.com/2011/07/21/microsoft-xbox-kinect-profits/

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