Xbox division posts a profit as Microsoft reports record quarter

Second quarter financial results from software giant Microsoft have seen the Home and Entertainment Division, which is responsible for the Xbox, posting a profit for the first time as sales rocketed.

The division announced a profit of $84 million on sales of $1.41 billion for the three months ended December 31st, reversing a loss of $397 million on sales of $1.27 billion in the same period last year.

Although it still remains unlikely that the Xbox will ever break even overall, given the scale of losses in its life to date, achieving a profitable quarter is a huge milestone for Microsoft and reflects both the huge success of Halo 2, which has racked up $300 million in revenue since its launch, and the strong hardware sales of the platform during the holiday season.

Microsoft's figures reveal that 19.9 million Xboxes have now been sold, with the lion's share - some 13.2 million - of those in North America, where the platform has improved its year-on-year market share in for the past 14 months consecutively.

Europe lags far behind with five million consoles sold, while the Asia-Pacific region manages just 1.7 million consoles, giving a clear indication of where Microsoft's games strategy has been a success - and where there is still much to be done to shift Sony and even Nintendo from their market positions.

Interestingly, the Xbox worldwide figure isn't that far ahead of Nintendo's GameCube figures, which were announced earlier this week and showed total shipments of about 18.8 million units, and with the Xbox achieving a 7.7 attach rate in North America (believed to be lower elsewhere) compared to the Cube's global attach rate of over 8, software sales across the two platforms in this generation have probably been broadly similar.

Microsoft's achievement in terms of bringing in a profitable quarter for its console was lauded by outgoing CFO John Connors, who commented that "Home and Entertainment has really turned the corner in all respects - Halo 2 and Xbox Live have been remarkable, exceeding our expectations."

"More Xbox consoles were sold during the critical holiday season in the United States than any of our competitors' consoles," he continued. "Demand was so great that we nearly made our full-fiscal-year console target six months ahead of schedule."

In terms of future projections, Microsoft expects to hit 21 to 22 million installed units of the Xbox by the end of its financial year in June, with Xbox Live subscription numbers of 1.6 to 1.8 million users in the same timescale - an estimate which has been raised from the original target of 1.5 million.