Microsoft has stated that they have suffered losses for its entertainment and devices division. They have cited lower Xbox 360 sales as the main reason for the fall in revenues for the first quarter of 2007.
Microsoft also said that the operating loss of USD 315 million, compared to USD 402 million for the same quarter last year, was because of the costs related to the launch of media player Zune and expenses sustained by extending the warranty for Xbox 360. They had shipped around 500,000 consoles, which is less than the 1.7 million units that Microsoft had shipped in the third quarter of 2006. Due to this, the sales of Xbox and PC software were also affected.
When the Xbox 360 was released, it had done very well. It was thought that the launch of PS3 would affect the sales of Microsoft’s next gen console. Instead, it was the Nintendo Wii, which did damage to the sales of the Xbox 360.