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Xbox drags on Microsoft profit | |
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| Time: 19:09 EST/00:09 GMT | News Source: CNET | Posted By: Matthew Sabean | ||
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While Microsoft is touting strong initial sales for the Xbox, analysts say the new video game console will be a drag on the company's bottom line for at least another year. That's because Microsoft is selling each console for less than it costs to manufacture--a widely copied practice in the video game business. Makers of game consoles typically count on sales of their own software and licensing revenue from third-party software to partly subsidize the cost of making game machines. Such subsidies--which don't happen in Microsoft's core software business--are built into the price of the Xbox and will undercut Microsoft profits for some time to come. Microsoft hailed the successful launch of the Xbox in reporting earnings Thursday for its second fiscal quarter. The company reported it sold 1.5 million units of the console in the quarter, at the high end of internal estimates, and said it was on track to sell 4.5 million to six million units by the end of the 2002 fiscal year on June 30. | ||
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