The growth was propelled by the growing dominance of its Xbox 360 console, the Kinect motion-sensing system, and its online game service Xbox Live.
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Revenues in the Entertainment & Devices business — which includes Xbox games, consumer software, Zune and Windows Mobile — for the fourth fiscal quarter were $1.48 billion, up from $1.14 billion a year earlier. The operating profit was $32 million, compared to a loss of $172 million a year earlier.
For the fiscal year, Microsoft reported revenues of $8.91 billion, up from revenues of $6.67 billion a year earlier in Entertainment & Devices. The profit for the fiscal year was $1.32 billion, more than double from the profits of $618 million a year ago.
Overall, that’s a big turnaround for Microsoft and it reflects the gains that the Xbox 360 has made against Nintendo in the past year. The Nintendo Wii has sold 87.9 million units since 2006, while the Xbox 360 has sold 54.8 million since 2005 and the PlayStation 3 has sold 51.5 million units since 2006.
David Cole, an analyst at DFC Intelligence, said that the Xbox 360 will likely have its second-best year in history in 2011, second only to 2010 results.
“It is really unique when a console system has its best sales in year five and six,” Cole said.
The Wii has lost its luster as the novelty of its motion-sensing remote has worn off and there are fewer cool games being developed for it. Nintendo’s own sales have further slowed as Apple’s iPhone, iPad and iPod Touch products steal customers from the portable console business.
Meanwhile, Microsoft has led U.S. console sales for 12 of the last 13 months, according to market researcher NPD.
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The Xbox 360 and the PS 3 have gained ground as better 3D games have appeared for those consoles. And Microsoft in particular benefited from a big boost related to the November, 2010 launch of its Kinect system, which lets you use your body as the controller.
Microsoft said it sold 1.7 million Xbox units in the fourth fiscal quarter, up 18 percent from a year ago. It also has more than 35 million active Xbox Live users and unveiled what it called a strong holiday line-up at the recent E3 trade show. Among the titles coming are Halo Combat Evolved Anniversary for this fall and Halo 4 (pictured) for next year. Billy Pidgeon, an analyst at M2 Research, said that Microsoft is ahead with Xbox Live and connected consoles.
“Based on these strengths, I’d argue Microsoft is the top vendor in the videogame console category,” Pidgeon said. “Wii has a large install base but more of the Wii base is inactive. Wii software performance is far under the potential opportunity.”