Microsoft has reported that their just raking in the cash this first quarter, thanks as usual to Office and Windows. Microsoft did a amazing load of profit for this past quarter, with them reporting $4.93 billion up from $2.98 billion last year. Whats interesting is the record Vista sales, come after Ballmer said that financial experts might be over expecting. So his comments made people re-adjust low and then Microsoft now reports they ended up beating all profit expectations. Two billion dollars in growth year over year is an amazing feat even with a new OS and Office launch. I suppose maybe people should have listened when they said that vista was selling faster than xp ever did.
But heres the interesting thing, Microsofts representatives said they expect the second quarter to also remain this high. Buy many microsoft batchers are calling the 360 and zune a black hole of money, and that the 300 million in losses from the Entertainment Division are “bad”. Well i’m here to give my 2 cents, and it has to do with the fact that the xbox and zune go well beyond just being a product microsoft sells. They aren’t just a keyboard or mouse, they’re an ecosystem, and as such with them comes alot of other factors. Bill Gates mentioned this fact before when asked if they regretted the 360 because of all the losses year after year. He said that you can’t determine the effect the 360 has had because it moves into all realms of Microsoft. The 360 is an advertising vehicle for microsoft, a 30 second spot during the superbowl that has marginable effect is 3 million dollars and it’s only for 1 day for 30 seconds.
The 360 on the other hand as well as the zune, are household names and because of that Microsoft in turn gets it’s name as a business into each consumers house and living room. That effects peoples perspective of the company. So even if you look at the 300 million loss from Q1 2007 as an advertisement campaign that ran 24/7 for 3 straight months inside over 10 million homes and across hundreds of thousands of websites and tv shows. It doesn’t look like that bad of an investment.
On top of the investment being good for their advertising it’s also a great because they will bring the product to profit, most likely by year end. Some say the problem is that only 500k 360′s moved this quarter down from 1.7million last year, but they neglect to remind you that this quarter didn’t see any of the really big blockbuster 360 games come out like halo 3 or bioshock or assassin’s creed, while it did have to contend with 2 new launching consoles. The end of 2007 will show microsofts true strength in the console business as they roll out the cost saving 65nm cpu’s and start to release their big blockbuster game franchises to drum up sales once again. Not to mention the zune v2 thats bound to come this year, and with it bring its own round of advertising venues.
Source: Gizmodo
