Microsoft drops $400m with Xbox One, but gaming division revenue up strongly

Microsoft has just revealed its earnings report for Q4 of the fiscal year 2014, and it has revealed some interesting numbers concerning the sales of the Xbox One, and the Computing and Gaming Hardware division overall.

Computing and Gaming Hardware revenue went up to $3.2 billion (£1.9 billion) or by 49 per cent, with actual Xbox revenue (of both the new console and old Xbox 360) up to $1.7 billion (£1 billion), an increase of 34 per cent. That boost was mainly driven by the Xbox One released last November, and there was a decrease in Xbox 360 sales (unsurprisingly).

But in actual fact, overall gross margin of the Computing and Gaming Hardware arm dropped, as the cost of revenue also shot up by 59 per cent to $3.2 billion (£1.9 billion). Xbox cost of revenue went up by 72 per cent to $2.1 billion (£1.25 billion), meaning the Xbox console actually leaked to the tune of $400 million (£240 million) – though overall, the gaming division still turned a profit.

And of course, the Xbox was bound to suffer financially in term of launch costs and associated marketing push.

Related: Xbox One sales have doubled in US since launch of non-Kinect bundle

Microsoft did make an announcement on the number of units shifted, too, with the Xbox selling 11.7 million consoles during the 2014 financial year. That was up from 9.8 million the previous year, but sadly Microsoft didn't say how many of the 11.7 million units were the Xbox One (as opposed to the Xbox 360).

As for the Surface hybrid, Redmond also revealed that its revenue was up 157 per cent to $1.3 billion (£770 million).