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Red Ring of Death surges Xbox division losses

Microsoft just released its Q4 and fiscal year financial results, which showed the company’s growth at a 15 percent increase over last year. Overall, things were good at Microsoft, though the company’s Entertainment and Devices Division (EDD) weren’t one of the company’s financial stars.

The EDD once again posted losses, but this year a stunning $1.89 billion – about 47 percent more than the previous period’s $1.28 billion loss from last year.

For Q4, operating losses increased 183 percent to $1.2 billion, mostly due to Microsoft’s over $1 billion charge for its new three-year warranty against the Red Ring of Death.

Microsoft attributes the majority of its operating loss to the change in Xbox 360 warranty policy and slowing sales, though the loss was "partially offset by decreased Xbox 360 console manufacturing costs." Also helping to pick up the slack were sales of Zune, video games and Xbox 360 accessories.

Overall revenue was down during Q4 at $1.16 billion, but fiscal year revenue was up 28 percent to $6.08 billion.

Despite this rather hefty shortfall, Microsoft expects great things for the upcoming year. In May, Robbie Bach, president of the EDD, said that the division would be profitable by 2008. “It's a business that will be profitable next year—we'll make money next year and that will be the first time, which is pretty exciting,” said Bach. “And then the next two or three years are the place where you need to make tracks, and the next two or three years are where you have to make money.”

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Slowing sales
By phatboye on 7/20/2007 8:54:22 AM , Rating: 5
quote:
Microsoft attributes the majority of its operating loss to the change in Xbox 360 warranty policy and slowing sales


MS should expect sales to continue to slow until they actually fix the RRoD problem and not just extend the warranty, and lower the cost of entry for the console.




RE: Slowing sales
By omnicronx on 7/20/2007 8:57:31 AM , Rating: 2
The new 65nm cores should be out by Christmas, should fix any heat problems. Just in time for the fall/winter video game rush.. mmm halo3, gta4, etc etc etc...

Things do look good on the horizon with games like that ;)


RE: Slowing sales
By Highbuzz on 7/20/2007 9:38:02 AM , Rating: 2
I hope so. I'm looking to get a 360 soon and don't want to have to deal with this. Even if the warranty covers the 360, it's such a hassle to send it in.


RE: Slowing sales
By qrhetoric on 7/20/2007 11:49:43 AM , Rating: 3
Doesn't matter if they have 65nm processors if no one buys them :)


RE: Slowing sales
By Rampage on 7/20/2007 12:03:35 PM , Rating: 2
Thats what I'm waiting for.

Halo 3 + the Falcon 360 Elite.
I think you'll see a whole lot of people purchasing at that time with me.


RE: Slowing sales
By EndPCNoise on 7/20/07, Rating: 0
RE: Slowing sales
By corduroygt on 7/20/2007 9:35:43 PM , Rating: 2
compare it to an older xbox and it should be noticably quieter.


RE: Slowing sales
By EndPCNoise on 7/21/2007 12:51:52 AM , Rating: 3
compare it to an older xbox and it should be noticably quieter.

I see 3 problems here...

1) You don't know this to be true.

2) It is not a practical solution for most.

3) Say you just happen to have access to a working RRoD 360. If your new Elite is not more quiet, what then? Are you going to take your new Elite back to the store? Are you going to continue exchanging your Elite until you find one that is more quiet?
Come on...


RE: Slowing sales
By 9nails on 7/21/2007 10:34:18 AM , Rating: 2
If you have an RRoD 360, get it repaired! Microsoft said that they would cover the bill. But it might take some time before they get all of them sent in...

But to your question, just look at the SKU numbers. The Falcon Xbox 360's will carry a different number than today's products. (Wait until they ship Falcon Elite's before you ask me what that number will be!)


RE: Slowing sales
By EndPCNoise on 7/21/2007 1:17:07 PM , Rating: 1
just look at the SKU numbers. The Falcon Xbox 360's will carry a different number than today's products.

From what I have read, Microsoft has no plans for a new SKU.


RE: Slowing sales
By TSS on 7/21/2007 10:23:37 AM , Rating: 2
if it's quieter i'd be more worried then when its louder.

even with cooler components, if you decrease formfactor (and thus cooling efficiency) or you cut the airflow to make it quieter yet give the same amount of cooling, it makes not a bit of difference.

i'd not expect something that runs as hot as a high end PC (which it is really) in that small a case, to become quieter. unless its DoA ;)


RE: Slowing sales
By JimFear on 7/22/2007 10:02:53 AM , Rating: 2
Look at the manufaccturing date, I've read that Falcon has apparently been in development since the beginning of the year with them finally going into production this month (July), so all with a manufacturing date of july 2007 and later will be falcon. The market was however flooded with old consoles though, you'll need to wait till later on in the year before Falcon works its way into shops.

You can view the manufacturing date by looking in that small flap on the box which shows you the serial number.


RE: Slowing sales
By Samus on 7/23/2007 3:36:07 AM , Rating: 2
I will. I've been waiting for a black 360 with HDMI (finally out) but still want something that uses less power. 65nm should shrink the power supply by 40-watts or so.


RE: Slowing sales
By SiliconAddict on 7/21/2007 1:33:19 AM , Rating: 2
A black eye doesn't heal overnight.
Nor does word of mouth of the RRoD. MS is going to have to do battle in the PR ring if they want to come out of this holiday shopping season successfully. That being said they have a metric shit ton of, what looks to be good, games coming up so if they can get things straightened out....Hell I might even buy a 360. But first they have to prove that the RRoD has been solved. Warranty smorranty. I don't need my console to be in the shop for repairs multiple times.
That and I wouldn't mind a price drop. $299 for a 60GB please?


RE: Slowing sales
By Calin on 7/23/2007 2:53:24 AM , Rating: 3
Transition to a smaller architecture is not always a solution to heat problems - see Northwood to Prescott.
But indeed, things look good for Microsoft


RE: Slowing sales
By SmokeRngs on 7/23/2007 1:29:49 PM , Rating: 2
quote:
Transition to a smaller architecture is not always a solution to heat problems - see Northwood to Prescott.


There is a difference in the Northwood to Prescott change and the change for the Xbox360. Northwood to Prescott wasn't just a die shrink; there were some changes to the actual architecture such as a lengthening of the pipeline. This was one of the main reasons Prescott ran hotter.

In the case of the Xbox360, it's mostly a die shrink. I wouldn't be surprised if there are some changes to the core (rearrangements) during the shrink for power and heat reasons but no chance for an actual architecture change. Since this is the case, it should do nothing more than lower the power required which lowers the heat. Core changes alone can bring this about but the inclusion of the die shrink should make an even bigger difference.

I'm just saying you cannot directly compare the two as they are completely different situations.


RE: Slowing sales
By dblagent on 7/20/2007 9:32:29 AM , Rating: 2
I agree, I am personally wanting to get one but am not going to purchase until the new models come out. If they are smart they will get those out as fast as possible at this point because everyone is aware of the issue with the current models. I already own games and accessories, but not the console as I want the newer model.

On a side note, I also saw a PS3 this week that had gotten so hot that it had melted the HDMI cable used to connect to the television. Had to use pliers to remove it and eventually it was OK, PS3 still worked though.


RE: Slowing sales
By omnicronx on 7/20/2007 9:37:41 AM , Rating: 1
quote:
On a side note, I also saw a PS3 this week that had gotten so hot that it had melted the HDMI cable used to connect to the television. Had to use pliers to remove it and eventually it was OK, PS3 still worked though.


wow thats crazy, of all the things to overheat, i never would have guessed an hdmi cable would do such a thing. Was it a cheap piece of shit? or was the a quality cable that just got fried for no reason. For all the good press the ps3 has got for not having any problems, it would be hilarious if it broke peoples 50 dollar hdmi cables.


RE: Slowing sales
By mdogs444 on 7/20/2007 10:04:52 AM , Rating: 3
Are you referring to the metal portion of the HDMI cable melting, and thus soldering itself to the connector? Or are you referring to the cable insualation?

I find hard to believe that either one would melt due to "heat", but more less due to a shorted component. The temperature in which the metal would melt would be awful high, and much higher than the PS3 unit would get, while still being able to work at a later point in time. I have seen cable insulation melt due to reversed current of sorts, like touching two hot leads at once.

On my side note, i really hope no one paid $50 for an HDMI cable....but if they did, they deserve the bad luck for not researching the price and throwing $45 away! lol jk.


RE: Slowing sales
By GreenyMP on 7/20/2007 10:44:03 AM , Rating: 2
mdogs444 is right. Please don't spend $50 on your HDMI cables. I know that your local bricks and mortar retailers all want to sell you a "premium" cable for $80 - $130. But you can buy them for less than five dollars online.

I am not saying that the $130 cable is not better. But just don't come complaining to the forum about how your game system set you back over $700 because you had to buy the "premium" cable.


RE: Slowing sales