Microsoft's Financials: Revenue Up, Xbox In The Weeds

[Karloff]

Microsoft's Financials: Revenue Up, Xbox In The Weeds

"We are seeing lots of consumer excitement for Xbox One, Surface 2 and Surface Pro 2, and the full spectrum of Windows 8.1 and Windows Phone devices," says Microsoft.

Microsoft's Q1 2014 financials [http://www.escapistmagazine.com/news/view/126139-Microsofts-Q4-Financials-Modest-Growth-Not-Much-Xbox] are out and, as you might expect, it made a ton of money: $18.53 billion revenue for the quarter, with net income of $5.24 billion. That does include a chunk of cash - $113 million - related to deferred revenue from Windows 8.1 pre-sales in previous quarters, but let us not quibble about the small stuff. Microsoft certainly isn't about to; "our devices and services transformation is progressing and we are launching a wide range of compelling products and experiences this fall for both business and consumers," says Steve Ballmer, soon to be the former CEO.

But what of Xbox? Well, Microsoft's changed its reporting policies [http://view.officeapps.live.com/op/view.aspx?src=http://www.microsoft.com/investor/downloads/events/Q1-FY14-Segment-Reporting-Changes.docx] as of this quarter. Now there's three categories: devices and consumer licensing, devices and consumer hardware, and devices and consumer other. Licensing refers to its OS and related software, including Office and Windows Phone.

Hardware is the Xbox 360 - and presumably also the Xbox One, when it launches - its accessories, second and third party video games, and Xbox LIVE subs. Revenue's up in that sector, but gross margin's down about 45% compared to this time last year. It's making more money, but it's costing the company a lot more to achieve that revenue bump. That said, Hardware also includes Surface and Microsoft PC accessories, which muddies the waters; it's difficult to tell Xbox hardware sales performance when it's in there with the other stuff.

Other is even more of a catch-all. Yes, it includes Xbox LIVE transactions - not entirely sure why transactions are so intrinsically different from subscriptions as to deserve to be in Other, but there you are - but it also includes everything else. And what is everything else? "Windows Store ... the Windows Phone Marketplace, search advertising, display advertising, subscription, comprising Office 365 Home Premium, Studios, comprising first-party video games, our retail stores, and certain other consumer products and services not included in the categories above," says Microsoft [http://view.officeapps.live.com/op/view.aspx?src=http://www.microsoft.com/investor/downloads/events/Q1-FY14-Segment-Reporting-Changes.docx]. So if you wanted to know whether first party video games and Xbox LIVE transactions are doing well, the answer is ... probably? Maybe? Other's revenue and gross margin are both up, but if you can tell whether Xbox LIVE transactions and first party game studios helped or hindered, you must work at Microsoft.

Source: Microsoft financials [http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY14/Q1/default.aspx]


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[MiskWisk]

Can't help but feel they are cooking the books on this one. They might not be or could just be re-categorising expenses under different sections to make it appear that they are doing better. Also

We are seeing lots of consumer excitement for Xbox One

Unless Microsoft are counting all the people complaining about it and making jokes, I can't see where they are getting this from.

 

[fix-the-spade]

So essentially the 360/Xbox division is doing fine, in fact it's doing so fine that's been able to suck up the cost of creating Xbone and writing off more than a billion dollars worth of unsold Surface mk1 tablets whilst still maintaining a profit.

That makes the voices shouting for the death of the Xbox a couple of years ago sound a bit premature, it also seems to mean Xbox has finally dug itself out of the financial pit that was the RRoD.

 

[Idlemessiah]

So Microsoft made a lot of money but theres no telling how the Xbox brand is performing because they hid the data under other data. Speculating that they've had bad sales by any chance?

We are seeing lots of consumer excitement for Xbox One

Unless Microsoft are counting all the people complaining about it and making jokes, I can't see where they are getting this from.

I'm gonna call you out here. The only people complaining about the XB1 are the people who were at E3, the people who read coverage of E3 and the people who heard it from those people.
Sure that's a lot of people but it is a small fraction of the Xbox's potential market. Most of the guys I work with are big Forza / Gears / Halo bros and are all planning on getting the XB1. So IRL I know more people who want the XB1 than people who don't. Bam, there it is; consumer excitement.

 

[Baldr]

Who care how they report their revenue/losses. With the likes of NPD, Forrester Research, and other firms that report independent data numbers, that are pretty close to actual numbers.

 

[Midniqht]

This actually doesn't surprise me. They aren't really getting money from the Xbox One yet. Some pre-orders of the console don't charge until it actually ships. People aren't spending as much on a 360 if they're waiting on the newest console. Hell, even if they're barely breaking even on the Xbox front right now, it'll probably go up again once the Xbox One actually comes out, since they'll then actually be making money off of things like new hardwire (accessories and such, not necessarily the console) and software (games).

 

[BloodSquirrel]

So Microsoft made a lot of money but theres no telling how the Xbox brand is performing because they hid the data under other data. Speculating that they've had bad sales by any chance?

The problem with that theory is that the "other data" mostly includes Microsoft's attempts to break into the phone/tablet/google glass market, which have been going pretty poorly. As in "900 million dollar write-down" poorly. I'm struggling to think of any product in that devision that could actually be doing well enough to hide just the poor surface sales, let alone Xbox sales as well.

I'm gonna call you out here. The only people complaining about the XB1 are the people who were at E3, the people who read coverage of E3 and the people who heard it from those people.
Sure that's a lot of people but it is a small fraction of the Xbox's potential market. Most of the guys I work with are big Forza / Gears / Halo bros and are all planning on getting the XB1. So IRL I know more people who want the XB1 than people who don't. Bam, there it is; consumer excitement.

Not true: The always-online stuff created a big enough stir to get it mentioned on late night television, and it's preorders have been a lot weaker than the PS4s.

What's true is that most of the people still holding a grudge over the always-online are the forumdwellers, although the price is still going to make a lot of buyers wince.

 

[Adam Jensen_v1legacy]

We are seeing lots of consumer excitement for Xbox One

Where are these mythical creatures? Show yourselves, you dirty buggers.

 

[Atmos Duality]

The problem with that theory is that the "other data" mostly includes Microsoft's attempts to break into the phone/tablet/google glass market, which have been going pretty poorly. As in "900 million dollar write-down" poorly. I'm struggling to think of any product in that devision that could actually be doing well enough to hide just the poor surface sales, let alone Xbox sales as well.

Good reason for that too; the Surface is pretty bad.
I dread the day that I have to work on any more of them...or anything else with that godawful Windows 8 "idiot-proof" interface.

 

[BloodSquirrel]

The problem with that theory is that the "other data" mostly includes Microsoft's attempts to break into the phone/tablet/google glass market, which have been going pretty poorly. As in "900 million dollar write-down" poorly. I'm struggling to think of any product in that devision that could actually be doing well enough to hide just the poor surface sales, let alone Xbox sales as well.

Good reason for that too; the Surface is pretty bad.
I dread the day that I have to work on any more of them...or anything else with that godawful Windows 8 "idiot-proof" interface.

I've played with one, and they're pretty damn nice. Android and iOS really can't compare to actually having a real operating system. My android tablet is nice for when I can't bring my laptop around. The surface is capable of straight-up replacing my laptop for 90% of its functions.

 

[Midniqht]

The problem with that theory is that the "other data" mostly includes Microsoft's attempts to break into the phone/tablet/google glass market, which have been going pretty poorly. As in "900 million dollar write-down" poorly. I'm struggling to think of any product in that devision that could actually be doing well enough to hide just the poor surface sales, let alone Xbox sales as well.

Good reason for that too; the Surface is pretty bad.
I dread the day that I have to work on any more of them...or anything else with that godawful Windows 8 "idiot-proof" interface.

I'll respectfully disagree with that. I've played with both generations of the Surface, and they're far from bad. For something that is more or less an "ultrabook" by specs and use-cases, they're great devices. I desperately want one for work.

 

[Lo Flying Frying Pan]

My Enterprise and Department is soooo not excited or interested in deploying Windows 8.1
My buds don't use a Surface nor do any of them own Windows Phones
Not a single person I know (only a measly few hundred folks) is planning to get a Xbone

I'm not seeing this mythic "excitement"

 

[Atmos Duality]

I've played with one, and they're pretty damn nice. Android and iOS really can't compare to actually having a real operating system. My android tablet is nice for when I can't bring my laptop around. The surface is capable of straight-up replacing my laptop for 90% of its functions.

Might as well address both.

I'll respectfully disagree with that. I've played with both generations of the Surface, and they're far from bad. For something that is more or less an "ultrabook" by specs and use-cases, they're great devices. I desperately want one for work.

I've had some odd problems in helping my friend getting his Surface to cooperate fully with his work software; even though it's Win8 compliant. And numerous, weird issues with getting some programs to recognize inputs from both USB and Bluetooth. (The service for bluetooth was turning itself off when he plugged something into the USB, for absolutely no reason. They don't even share the same address range according to device manager. I don't know what the fuck was going on there.)

Last night, I had to dig through some forums just to locate where they dumped the cmd prompt just so I could look up some basic network info from ipconfig. (Naturally, the regular information was obfuscated behind shitloads of "idiot-proofing" menus), because it wasn't coming up like it was supposed to.

Until I get used to the new interface, I'm not looking forward to troubleshooting any for work and I'm definitely not getting one unless it's dirt cheap and fully functional.

 

[BloodSquirrel]

I've had some odd problems in helping my friend getting his Surface to cooperate fully with his work software; even though it's Win8 compliant. And numerous, weird issues with getting some programs to recognize inputs from both USB and Bluetooth. (The service for bluetooth was turning itself off when he plugged something into the USB, for absolutely no reason. They don't even share the same address range according to device manager. I don't know what the fuck was going on there.)

A lot of "work software" is incredibly buggy and doesn't like cooperating with anything.

The fact that the surface is even capable of doing these things in the first place when its competitors as stuck with basic mobile apps is a wee bit more important than there being a few glitches or you having trouble finding the command prompt.

 

[faefrost]

We are seeing lots of consumer excitement for Xbox One

Where are these mythical creatures? Show yourselves, you dirty buggers.

They're the easy to find ones. It's the people that are expressing "enthusiasm" for the Surface 2 and Surface 2 Pro that are more mythical than Unicorns.

 

[Midniqht]

I've played with one, and they're pretty damn nice. Android and iOS really can't compare to actually having a real operating system. My android tablet is nice for when I can't bring my laptop around. The surface is capable of straight-up replacing my laptop for 90% of its functions.

Might as well address both.

I'll respectfully disagree with that. I've played with both generations of the Surface, and they're far from bad. For something that is more or less an "ultrabook" by specs and use-cases, they're great devices. I desperately want one for work.

I've had some odd problems in helping my friend getting his Surface to cooperate fully with his work software; even though it's Win8 compliant. And numerous, weird issues with getting some programs to recognize inputs from both USB and Bluetooth. (The service for bluetooth was turning itself off when he plugged something into the USB, for absolutely no reason. They don't even share the same address range according to device manager. I don't know what the fuck was going on there.)

Last night, I had to dig through some forums just to locate where they dumped the cmd prompt just so I could look up some basic network info from ipconfig. (Naturally, the regular information was obfuscated behind shitloads of "idiot-proofing" menus), because it wasn't coming up like it was supposed to.

Until I get used to the new interface, I'm not looking forward to troubleshooting any for work and I'm definitely not getting one unless it's dirt cheap and fully functional.

Sorry if I come across as harsh or condescending here (that's not the intent), but I'm assuming that since you know enough about hardware and software to help a friend in device support, that you'd know that there's a shortcut for the CMD prompt that's been in place for a LONG time. In case you don't know, hey, it's learnin' time!

Windows Key + R opens the Run window, type "cmd" (sans quotes) and hit enter. This shortcut has been around for as long as I can remember, and I've honestly never seen someone actually hunt for the actual command prompt action from a list or menu. I worked in IT for some time and now I work for a software company. The Windows Key + R to run or open certain windows is a lifesaver.

The bluetooth issue seems to be more of a glitch than anything, not necessarily related to the Surface device itself. Hardware-wise, it's a brilliant device if you can afford it.

 

[Atmos Duality]

Sorry if I come across as harsh or condescending here (that's not the intent), but I'm assuming that since you know enough about hardware and software to help a friend in device support, that you'd know that there's a shortcut for the CMD prompt that's been in place for a LONG time. In case you don't know, hey, it's learnin' time!

Windows Key + R opens the Run window, type "cmd" (sans quotes) and hit enter. This shortcut has been around for as long as I can remember, and I've honestly never seen someone actually hunt for the actual command prompt action from a list or menu. I worked in IT for some time and now I work for a software company. The Windows Key + R to run or open certain windows is a lifesaver.

That shortcut was literally the first thing I tried. (I'm far too familiar with it, given how often I use it for ipconfig and netstat alone). For no explainable reason, it didn't work. I looked it up to see if it was changed or removed, but no. The shortcut was still there; just not functioning.

I had to search for the prompt from within help and run it from there.

Lots of input problems...

The bluetooth issue seems to be more of a glitch than anything, not necessarily related to the Surface device itself.

The bluetooth problem was persistent, not just a one and done glitch.
Could be anything, but going by experience and Occam's Razor: Bad drivers and/or weird interaction with security software.

It's not my device, so I can't "dissect" it like I did when learning Vista and NT's structures before.

Hardware-wise, it's a brilliant device if you can afford it.

I'm not that impressed with it thus far, and to be frank, I cannot figure out why everyone is gushing over it so much.
I recognize that it's still rather new, so it has time to adapt and improve, but for the time being I cannot stress how much I dislike what I've gone through in using and troubleshooting the Surface, and Win8 in general.

A lot of "work software" is incredibly buggy and doesn't like cooperating with anything.

The software in question is just a kitbash of PuTTy that lets him connect to his company's servers remotely. So, basically just PuTTy with a small Python app to validate the connection. Worked fine on Win7, and Vista, Win8 couldn't make heads or tails of it.
*shrugs*

The fact that the surface is even capable of doing these things in the first place when its competitors as stuck with basic mobile apps is a wee bit more important than there being a few glitches or you having trouble finding the command prompt.

I've had nothing but grief with the damn things so far, so forgive me for sullying the "greatness" that is Surface.

 

[RicoADF]

*SNIP*
I've had nothing but grief with the damn things so far, so forgive me for sullying the "greatness" that is Surface.

I'll second you here, although not surface tablets but Windows 8 in general. The interface is inconsistant and anoying, it's buggy (you seem to have found some) and the performance is less than on Windows 7 (I installed 8 on my laptop which can run Battlefield 3 at max settings and noticed just running the desktop had a performance drop, the 3 finger salute taking 30 seconds to come up, anything less than instant isn't acceptable). I will be putting 7 back on when I can be bothered, until then Windows 8 works but is disapointing and I warn people away from it. Also Start 8 was the only way I could stand the stupid inconsistent layout by putting it all back in 1 place and telling metro to piss off.

 

[jackpipsam]

I have been wanting to get a Surface pro for a long time now, however the prices are just too damn high for my budget now.
Mainly because I pre-ordered an Xbox One, that took away any budget lol.

I also made the jump to a Windows Phone, I hadn't got one before due to me being on pre-paid thus meaning I would have to get like a $1000 device, but thankfully they brought out a cheaper model and so far I am enjoying using it quite a bit.