Xbox 360 sales drop off during Microsoft's third quarter

Microsoft's division that includes its Xbox 360 business saw a notable decline during the company's third fiscal quarter, as the platform's hardware isn't selling to the same extent it did one year ago. For the three months ended March 31, Microsoft shipped 1.4 million Xbox 360 consoles -- roughly half of the 2.7 million consoles the company shipped during the same quarter in 2011. With this decline in sales, revenue for the Xbox 360 platform dropped 33 percent to $584 million. This decline was largely attributed to the lower sales for the Xbox 360 console and Kinect peripheral, though Xbox Live revenues increased and somewhat offset this dip. The Xbox 360 platform contributed a bit less than a third of the $1.6 billion reported by the Entertainment and Devices division, which also includes Skype, Windows Phone, and the internet television service Mediaroom. Overall, this division saw its revenues decline by 16 percent, and before taxes, it suffered a loss of $229 million on a non-GAAP basis, down from a profit of $210 million year over year. The company claims that $100 million of that loss is due to a 35 percent increase in its research and development costs, possibly related to a new console rumored to be in development. Despite the significantly lower sales this quarter, Microsoft's console has remained the top-selling console for 15 months running. Considering the platform has remained the number one console after seeing sales drop off so dramatically, these lowered numbers suggest that the other aging home consoles are seeing similar declines. For comparison, Microsoft's Xbox 360 platform saw a healthy boost last quarter, thanks in part to strong holiday sales for the Xbox 360 console and its related software. While things looked a bit grim for the fiscal third quarter, Microsoft said Xbox 360 sales in the last nine months are comparable to the same nine-month period one year ago. For these first nine months of fiscal year 2012, Microsoft has shipped 11.9 million Xbox 360 consoles, which is the exact same number of Xbox 360s shipped during the first nine months of fiscal year 2011. Xbox 360 platform revenues (including software and digital sales) for the last nine months, however, have declined by $154 million, representing a 2 percent change year over year. Microsoft noted that video game software sales lagged in particular since Bungie's Halo: Reach gave the company a significant boost in fiscal 2011.