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$15 million loss now expected to yield 35-40 percent gain next year with Xbox One launch

Microsoft boasts record first quarter despite gaming losses

Microsoft’s Q1 revenues have hit a record high even as its entertainment division lost more than $15 million as it spools up for the jump into a new console generation.

The company overall did very well, reporting a consolidated revenue of $18.53 billion – up 16 percent from last year – and an operating revenue of $6.3 billion.

The big earners were Microsoft’s business and Windows divisions, which is nothing out of the ordinary.

The devices and consumer hardware and devices and consumer other – which together represent Microsoft’s gaming efforts – also did well, with the former up almost 37 percent to $1.49 billion, and the latter rising 17 percent to $1.64 billion.

The majority of the hardware revenues came from sales of Microsoft’s Surface tablets which the company claims has added $400 million to the business.

Considering the console launch Xbox 360 sales are still surprisingly strong at 1.2 million, down 29 percent from last year.

Xbox Live transactional revenue was up 25 percent year-over-year.

This rise in revenues wasn’t enough to combat the cost of the Xbox One launch next month, and all told the entertainment division lost $15 million.

Microsoft is bullish for the launch, which the company says it expects to be the biggest in Xbox history, pushing the devices and consumer hardware division up by 35 or 40 percent to between $3.8 billion and $4.1 billion.

Devices and consumer other – the games themselves – aren’t expected to rise that much since the year-over-year figures would have to compete with the Halo 4 launch last year.

Image: Flickr/Dell (Creative Commons)

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