Sales figures have already revealed that Sony’s PlayStation 4 is currently winning the next generation console war. But there's more bad news on the horizon for the Big M – and, no, we're not talking about the company's $1.7 billion Surface write-down, either. Nope, this new installment of losses relates to Microsoft's Xbox One which has apparently lost the company A LOT of money over the past 9 months.
Microsoft has just revealed the annual earnings report for 2014 which revealed production and advertising costs for the Xbox One were largely responsible for the company’s $400 million loss. Microsoft has sold 11.7 million consoles during 2014 on top of the 9.8 million it sold in 2013. The revenue from the console sales has now reached $1.7 billion but the company had to spend $2.1 billion on the production and launch of the Xbox One.
Microsoft’s report read, “Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One, which was released in November 2013, offset in part by a decrease in sales of Xbox 360. Xbox Platform cost of revenue increased $2.1 billion or 72%, due mainly to higher volumes of consoles sold and higher costs associated with Xbox One.”
Microsoft is trying to stimulate sales by taking the Kinect camera out of the bundle and offering it as an add-on accessory. This has allowed the company to drop the price of the console but it’s still not as low as Sony’s PlayStation 4.
Microsoft has a lot more work to do before it will begin to turn a profit; hopefully big titles such as Destiny coming in the next few months will up sales.