Last quarter: Microsoft lost $289 million on Zune, CE devices

Microsoft “is betting heavily on the consumer electronics business for future growth, and late last year it introduced a digital media player, Zune, which competes with Apple’s iPod. But Microsoft’s consumer entertainment and devices unit has contributeds no profits yet, losing $289 million in the quarter,” Steve Lohr reports for The New York Times.

Full article here.

The Associated Press reports, “Microsoft Corp. said Thursday its fiscal second-quarter profit fell 28 per cent, as delays from the launch of its new version of Windows cut into holiday-quarter revenue. For the three months ended Dec. 31, earnings fell to $2.63 billion from $3.65 billion… Revenue rose to $12.54 billion from $11.84 billion in the year-ago quarter.”

Full article here.

[Thanks to MacDailyNews Reader “Tom S.” for the heads up.]

[UPDATE: 9:42am EST: Updated headline.]
The figures for Apple’s last quarter: revenue of $7.1 billion and net quarterly profit of $1.0 billion vs. Microsoft’s much larger figures of $12.54 billion and $2.63 billion, respectively. Windows and Office are licenses to print money, it seems, regardless of how such licenses were obtained. Apple generated revenue of $4.061 billion on iPod, iTunes Store sales, iPod services, and iPod accessories vs. Microsoft’s $289 million loss on Zune and CE devices. That’s a differential of $4.350 billion.

Related articles:
The Motley Fool: Apple makes Microsoft’s Zune a paperweight – January 10, 2007
Zune: Apple cannot lose. Microsoft cannot win. – July 26, 2006


  1. I’m a Mac/iPod fan but I completely agree with critic.

    How can you spend so much time posting stories about FUD, inaccuracies and lies from biased and/or uninformed anti-Apple writers and then commit the exact same errors yourself?

    Sure, we know the iPod is great and Apple is hitting on all cylinders but that doesn’t excuse any blatantly inaccurate or miseleading posts.

    At the end of the day, MS makes a $12B+ annual after-tax profit. At that rate, they will be able to continue doing what they have done for 20 years….sell inferior products under the guise of massive marketing efforts.

    How about you just stick to correcting misleading reports about Apple products?

  2. Apple’s market cap is a much larger percentage of Microsoft’s than it was not so long ago. And while Apple continues to diversify and create new markets (iPhone and AppleTV), MS is left regurgitating variations of the same old crap. Before long it will implode.

  3. Ford lost $12 billion in 2006. Apple didn´t. Neither did Microsoft or Sony or Pepsi-Cola.
    Why is comparing one company to another important?

    And Apple did not make $4 billion in profit off iPod. And the lose of money by Microsoft is not solely from Zune.
    MDN, you guys need to reach beyond that high school education.

    MDN: “The figures for Apple’s last quarter: revenue of $7.1 billion and net quarterly profit of $1.0 billion vs. Microsoft’s much larger figures of $12.54 billion and $2.63 billion”

    So Microsoft made 21% profit on sales vs. 14% for Apple. Apple you have to do better.

  4. So if Apple made 14% profit on each item sold divided by how many items Apple sold last quarter…

    Apple surely has the highest profit on the iPod line up….wonder how much they lose on each computer they sell….
    Does Apple break out profit per division like it appears Microsoft is doing?

  5. jscan:

    Whilst I understand your point re: MDN, just wanted to make it clear that MS made a $2.5B profit on revenues of $12.5B – they didn’t make $12B profit.

    Considering Apple is a much smaller company, I think their profit of $1B on $7B revenues is especially good next to Microsoft, who made roughly double the profit on roughly double revenue – so both companies appear to be just as profitable, only Apple doesn’t have the same exposure in every industry sector that Microsoft does, do it’s pretty impressive IMO.


  6. Connor MacBook: “MS is left regurgitating variations of the same old crap.”

    Xbox, Zune: those are new. And Xbox is quite successful. Zune it is too early to tell if it will be a success.
    Wait another year or so.
    And wait for the synergy between Xbox and Zune to develop. Download movies, music etc on Xbox, watch on Zune!

    Instead of being critical of Microsoft, people should demand more of Apple. The MacWorld iFone only thing was lame. Where are all the new computers, now OSX. And did you know that sales of Apple desktops are dying – sales were about 20% under what was forecast.

    Wasn´t Leopard supposed to hit the streets before Vista?

  7. The Xbox still isn’t profitable, and with the competition they’re facing, it may never be. The Zune is just a pipe dream. Even if it were a better product, it would have a huge challenge catching up with the iPod. Microsoft has two cash cows: Windows and Office. With all the free alternatives to Office, why pay MS for what at this point is a stale product? Windows is showing its age too. XP is merely tolerated, and Vista is a disappointment, even to Windows fans. Microsoft needs a hit soon, or they will be in trouble, whatever the numbers are now. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  8. The Xbox is not really a success when measured against the other consoles. The Nintendo gamecube was considered a major failure by most people, and it sold just as many units as the Xbox did! So how does that make Xbox a success? Also, when I go to the store, I see that people are begging for PS3’s and Wii’s, and there are Xboxes sitting on the shelf that they don’t even consider getting instead.


  9. Can you imagine if Apple’s customer base was as brain dead as Microsoft’s customer base?

    Apple could really make big bucks selling any old piece of crap and not have to spend untold millions working for 2.5 years developing a cell phone killer.

    They would just have to rebrand a piece of LG crap, stick a half-baked OS on it and force it on their fan-base.

    Wait! That didn’t work for Microsoft’s Zune.

    Is the Microsoft customer base finally getting a clue?

  10. “To be fair, MDN clearly doesn’t understand accounting, and in this case has posted a very misleading and biased headline.

    Apple did not “make” $4 billion on iPods. That implies $4 billion in profit. They had sales of $4 billion for iPods.

    More importantly, the $289 million loss was for their entertainment division that, along with the Zune, also happens to sell the Xbox. So you really have no way of knowing what the numbers were for the Zune.

    While this is obviously a Mac centric site, it’s a bit disappointing that MDN actually doesn’t want to rely on facts and will put up a headline like this that has no basis in reality.”

    I like what that guy wrote. It’s true, Apple didn’t make 4 billion, they SOLD 4. Guess who else lost money when they released a new product – Apple! No one makes all their money back when the product is released – they make it back when they hit the BEP (break even point) So don’t gettin your panties in a wad Apple folks, it’s not an abberation for Microsoft, it’s part of business. Sony lost money on the PS 1-3 until they hit that point, so just stop.

    I really used to like this site, but the more I visit the more it makes me hate some of you guys. Just because MS sucks and Apple rocks, doesn’t mean that every thing MS does sucks or everything Apple does is invincible. Anyway, go Appple!

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