Microsoft Sees Record Quarterly Revenues On Kinect, Xbox Strength

The 2010 holiday fiscal quarter was Microsoft's best ever, with the company reporting record revenues of nearly $20 billion thanks in part to strong growth in the company's Xbox business, though quarterly profits were down slightly to just over $8 billion for the quarter. Revenues in Microsoft's Entertainment and Devices Division, which is dominated by Xbox-related products, were up 55 percent to $3.6 billion for the quarter ending December 31, 2010. The division, which showed a significant loss just two quarters ago, generated $679 million in profit for the company in the recently concluded quarter, up 86 percent from the same period a year ago. Microsoft specifically cited sales of 6.3 million Xbox 360s during holiday season -- up 21 percent over 2009 -- and 30 percent growth in the number of Xbox Live subscribers as drivers for the revenue growth. The company also pointed out the impact of the Kinect sensor's launch on its bottom line, saying sales of 8 million units in 60 days "far exceeded our expectations." The Entertainment and Devices Division is a small but growing part of Microsoft's overall portfolio, representing roughly 18 percent of the company's revenue and 8 percent of its profits for the quarter. Microsoft sees the division's growth continuing in the near future, with projected revenues for the 2011 fiscal year as a whole up 40 percent over 2010. In the holiday quarter, Xbox growth helped offset a nearly 30 percent year-over-year revenue decline in the company's Windows division. That division is now second to the company's growing Business division on both a revenue and profit basis.