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20-Year Microsoft Analyst Rick Sherlund says Xbox “Generates” $2 billion in Loss


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#1 AdmiralClassy

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Posted 08 November 2013 - 01:58 AM

Microsoft is generating $2 billion per year in revenue from Android patent royalties, says Nomura analyst Rick Sherlund in a new note on the company.

 

(He estimates that the Android revenue has a 95% margin, so it's pretty much all profit. 

This money, says Sherlund, helps Microsoft hide the fact that its mobile and Xbox groups are burning serious cash. 

For the past few years, Microsoft reported the revenue and operating losses of Entertainment and Devices, which was the group that housed Xbox, Windows Phone, and those Android royalty payments. 

That group always seemed to be profitable, but Sherlund says it's largely because of the Android money.

Sherlund says that if you back out the Android profits, Microsoft is probably losing $2.5 billion on Skype, Xbox, and Windows Phone. Of that, $2 billion in losses are attributable to the Xbox platform. 

Sherlund believes Microsoft needs to spin out Xbox. He sees it as an orphan group at Microsoft that doesn't really fit with anything it's doing. 

Investors are blind to Xbox's struggles, says Sherlund, because they are "concealed by the hugely profitable Android royalties.")

If this is true than that's sorta crazy and begs the question will microsoft continue to support the Xbox brand?

 

 

 

 

(Edit) Somehow forgot to post the link haha http://www.businessi...yalties-2013-11


Edited by AdmiralClassy, 08 November 2013 - 08:32 AM.

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#2 Auzzie Wingman

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Posted 08 November 2013 - 02:23 AM

I think they gave up supporting the Xbox Brand at their May reveal.


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#3 Nollog

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Posted 08 November 2013 - 04:27 AM

How come it's only you who can't wait 5 seconds to see if your thread posted and always double post your super-awesome threads?

Nah, I think it's a browser to IP.boards problem. I use to have this happen a lot as well when I was using Chrome, so I switched back to FireFox. But it only ever happened when I was using IP.board forums.

You post a thread, get an error, check the forum you posted it in to make sure, that's how it's been on this forum for at least a year now.

They're doing this because Bill Gates dream was a do-it-all box in the living room, and if they get in a position where their box is there, they can reap in insane amounts of money from movie and music downloads.

Edited by Nollog, 08 November 2013 - 04:31 AM.

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#4 Auzzie Wingman

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Posted 08 November 2013 - 04:30 AM

Nah, I think it's a browser to IP.boards problem. I use to have this happen a lot as well when I was using Chrome, so I switched back to FireFox. But it only ever happened when I was using IP.board forums.


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#5 AdmiralClassy

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Posted 08 November 2013 - 04:50 AM

How come it's only you who can't wait 5 seconds to see if your thread posted and always double post your super-awesome threads?
You post a thread, get an error, check the forum you posted it in to make sure, that's how it's been on this forum for at least a year now.

They're doing this because Bill Gates dream was a do-it-all box in the living room, and if they get in a position where their box is there, they can reap in insane amounts of money from movie and music downloads.

 

Didn't mean to double post it, clicked the post button and for some reason it double posted. Don't know why

 

Also I think I've only double posted like once before this and that's because no one had even viewed the topic in the section it was in for like 40-50 mins


Edited by AdmiralClassy, 08 November 2013 - 04:56 AM.

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#6 Hank Hill

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Posted 08 November 2013 - 06:26 AM

Microsoft is bleeding billions due to Xbox, they're fine.

 

Sony is bleeding billions due to the Vita, they're fine.

 

Nintendo turns a profit, they're doomed. 


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#7 Happy Monk

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Posted 08 November 2013 - 06:39 AM

If the XBOX One does not sell that well, Microsoft will pull out of the console market. That's what I think.


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#8 tboss

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Posted 08 November 2013 - 06:54 AM

makes me wonder if a group of people there want to keep making xboxs just because they want to bring them home and play games on them. regardless i do expect the X1 to suffer a very simmilar fate to wiiU, and PS4 to have a much less severe version.

 

but in the end nintedo is the only one who knows how to make money of videogames.



#9 Aplg8

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Posted 08 November 2013 - 08:11 AM

"Estimates" and "Probably"..........oh what passes for journalism and facts anymore.



#10 angelo07stang

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Posted 08 November 2013 - 12:18 PM

If the XBOX One does not sell that well, Microsoft will pull out of the console market. That's what I think.

The xbox one will sell great it already has way more preorders than the xbox 360 had and look how that turned out not worried at all can't wait for my day one edition xbox one forza 5 dead rising 3 and battlefield 4 haters gonna hate.


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#11 tboss

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Posted 08 November 2013 - 12:56 PM

didnt wiiU have more preorders than the wii too. the wii that for all intents and purposes, won the last generation?



#12 angelo07stang

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Posted 08 November 2013 - 01:11 PM

didnt wiiU have more preorders than the wii too. the wii that for all intents and purposes, won the last generation?

I call bull s hat on that 1



wow i am amazed at all the sony fanboys on this site I like the ps4 but I don't understand why all nintendo people trash the xbox one for no reason its an awesome system and will probably win the next console war as well.


Edited by angelo07stang, 08 November 2013 - 01:10 PM.

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#13 tboss

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Posted 08 November 2013 - 08:28 PM

I call bull s hat on that 1



wow i am amazed at all the sony fanboys on this site I like the ps4 but I don't understand why all nintendo people trash the xbox one for no reason its an awesome system and will probably win the next console war as well.

 

because most people here hate microsoft for the stunts they tried to pull.



#14 Hank Hill

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Posted 08 November 2013 - 08:53 PM

 

wow i am amazed at all the sony fanboys on this site I like the ps4 but I don't understand why all nintendo people trash the xbox one for no reason its an awesome system and will probably win the next console war as well.

 

You know, it's probably not for no reason.

 

It's probably because they tried to do away with used games/game sharing, always-online DRM, always-watching, always-listening, always-on Kinect, and proceeded to tell everybody to cram it in their ear, A.K.A.  #Dealwithit, when asked "what about people with poor internet?" They also told people that all of these "features" couldn't be turned off with the flick of a switch only to find out, lo and behold, that these features were turned off at the flick of a switch. Even then, there's still online DRM that requires the system to connect to the internet every 24 hours.

 

It's probably because being blatantly disrespected and lied to as a consumer for the sake of higher profit isn't high on the average persons' "I enjoy this greatly" list.

 

It's probably because most of Microsoft's unveiling of the Xbone was "TV SPORTS TV SPORTS SPORTS TV SPORTS MEDIA, oh yeah some games too but SPORTS SPORTS MEDIA TV TVTVMEDIAPASPORTSPORUAPJFGAS:FKASFAJKDF:"

 

But, I don't know. I guess it could just be anything that makes them hate it. Like the color green.

 

Let's blame the color green, that seems like a good scapegoat.


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#15 grahamf

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Posted 08 November 2013 - 10:32 PM

We're passionate about our game systems. It's like Red Sox fans vs the Edmonton Oilers, and about the same level of pointlessness. And yes, I'm aware they're different sports.

 

I had a Wii. I loved my Wii and all of it's games.

I had an Xbox 360. I was OK with it, but none of the games were interesting.

I got a Wii U. It plays my entire Wii Library and has some awesome games of it's own.

I just got a PS3. I'm already building a library of games I enjoy.

I have no interest in the Xbox One. But I'm not saying anything to my diehard Xbox fan brother-in-law.

I kind of want a PS4. I played Knack a little and LOVED it, but its not enough to justify the $400 PS4 alone.


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#16 angelo07stang

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Posted 09 November 2013 - 11:38 AM

You guys realize sony had the same ddm policies in place as microsoft but when microsoft took the backlash sony hurried up and changed stuff just like they did with the price ps4 would have been 500 too but instead sony took the camera out and made it 400. Sony is not as innocent as all you people be leave them to be but it is what its . I own very system for exclusives thats what its all about anyway the games but for people to trash xbox one is stupid its going to have great games and they will look great. Destructoid already posted that cod runs the best on xbox one and that the ps4 has frame rate issues lol.


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#17 Happy Monk

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Posted 11 November 2013 - 09:51 AM

The xbox one will sell great it already has way more preorders than the xbox 360 had and look how that turned out not worried at all can't wait for my day one edition xbox one forza 5 dead rising 3 and battlefield 4 haters gonna hate.

All I was saying is that I think Microsoft will pull out of the console market if the XBOX One does not prove a success in the long run.


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#18 Mewbot

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Posted 12 November 2013 - 03:23 AM

Microsoft is bleeding billions due to Xbox, they're fine.

 

Sony is bleeding billions due to the Vita, they're fine.

 

Nintendo turns a profit, they're doomed. 

B-b-b-b-but the wii u only sold 3.5 million in it's first 5 months on sale. Obviously nintendo has not other source of profit other than the wii u. They're doomed. Doomed I tell you.


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