Paul Thurrott, long time industry analyst and Microsoft insider, has a few weeks ago commented on the quarterly sales earnings that Microsoft released in a report recently. The insider has made a bold claim saying that the Xbox brand has “never been profitable”, and that Microsoft revealing big numbers in their earnings report only account for revenue (and not profit).
“One of the dirty little secrets of Microsoft’s Xbox/gaming business is that it has never actually turned a profit. So I was curious to hear Mr. Nadella utter these contorted words last night: ‘Our gaming business is now more than $9 billion, and growing profitably.’ So. $9 billion is revenues, not profits.”
Paul Thurrott believes that the $9 billion worth of the gaming business isn’t giving them profits but is just a number representing the total revenue it brings in. Development costs and other matters prove that most of the earnings fail to provide any kind of marginable profit for Microsoft on a large scale.
“Because I can state this with certainty: Microsoft’s gaming business is not profitable. In fact, it’s undergoing a digital transformation of its own.”, says Paul
Apart from that, Paul also stated in his “Microsoft Earnings Special Edition” article that he believes the popular opinion from analysts that the Xbox One X will fail in the future. This rumor had been circling the industry for quite some time now and many analysts, including Michael Pachter, but Microsoft is firm on its strategy with the 4k console so we’ll just have to wait and see if it’s true.
This shouldn’t come as a surprise at all as Microsoft had made it clear for some time now that it was indeed going through a transformation and shifting it’s focus on other more important aspects. One of these might be the Xbox Play Anywhere environment that they are focusing on, which is a great idea for a PC and console ecosystem.
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