Despite an overall good earnings report, Microsoft’s Entertainment & Devices division, which houses the Xbox and Windows Phone, saw a 16 percent drop in revenue from last year.
While Xbox remains the leading game console, sales were down 48 percent due to the “soft gaming console market,” according to Microsoft.
“But with the console market slowing down — which won’t pick up until the next generation console war begins next year (not including Nintendo’s Wii U release this Fall) — it’s becoming increasingly clear that Windows Phone will have to start earning some money for the Entertainment & Devices division,” reports VentureBeat. “Microsoft can’t afford to have two major product lines sagging and bringing down an entire business division.”
So far, the Nokia Lumia 900 has had a promising start, selling out in various retail stores. The phone could be the launching pad for the Windows Phone platform, but it has certainly been a costly endeavor for Microsoft.
“According to Microsoft’s 10-Q quarterly filing today, the division’s operating income also decreased, due to payments made to Nokia (Microsoft is paying Nokia $1 billion over the next few years for the Windows Phone partnership), a 33 percent increase in R&D costs, and a 50 percent increase in sales and marketing expenses,” the article states.
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