Microsoft announced Q4 FY06 earnings results this afternoon. The conference call was transmitted live at our Web site http://www.microsoft.com/msft/ and the replay and press release will be available there as well. Here are the highlights as they relate to the Xbox platform:

  • The Home and Entertainment division reported 94 percent growth driven by strong performance across all of its businesses. For the Entertainment and Devices Division (E&D), Microsoft is forecasting another strong year, with full year revenue growth of 30 to 44 percent and first quarter growth of 50 to 60 percent. 
  • Xbox 360 has achieved an unprecedented global launch and we now have a presence in nearly 30 countries. As a result of continued demand and steady sales for the next-generation leading Xbox 360, the platform grew more than 125 percent and resulted in 1.8 million console shipments during the fourth quarter. This brings our installed base through June to 5 million consoles with 3.3 million in North America, 1.3 million in Europe and 400,000 in the rest of the world.
  • As evidenced by the installed base of 5 million consoles and growing, consumers continue to respond to the unprecedented freedom to personalize their entertainment experiences that Xbox 360 offers. Key profit drivers for the platform include Xbox 360 software and accessory attach rates, which remain very strong relative to previous console launches. The Xbox 360 accessory attach rate remains the highest ever for the first eight months of a console launch in the US, holding at 2.9 accessory units sold per console (Source: NPD).
  • We continue to expect strong software and accessory attach rates in months ahead. By holiday 2006, we will have an expected catalog of 160 high-definition games, driven by online experiences that only Xbox Live can deliver. Xbox Live now boasts a community of more than 3 million members worldwide, with more than 6 million expected by this time next year. Presently, 60 percent of all Xbox 360 sold are connected to Xbox Live. Xbox Live Marketplace, the one-stop digital download center, has seen more than 18 million downloads since launch and more than 90 percent of connected Xbox 360 consoles are downloading content such as the latest game demos, trailers, content packs and themes. Furthermore, Xbox Live Arcade will continue to deliver new and classic bite-sized offerings. To date, there have been a staggering 5 million Xbox Live Arcade downloads with nearly 60 percent of all connected consoles already downloading and playing Xbox Live Arcade titles.
  • Accessory momentum is expected to continue at a record setting pace given forthcoming wireless accessories including the new Xbox 360 Wireless Racing Wheel and Xbox 360 Wireless Headset, not to mention the Xbox 360 HD DVD player coming this holiday. Giving our consumers the choice to customize their gaming experience as they see fit has proven to be a winning combination for all parties.
  • As such, Xbox 360 is tracking on a steady sales pace during a traditionally slower time of the year for console purchases. By holiday 2006, we believe we will have shipped more than 10 million Xbox 360 consoles worldwide and have an expected catalog of 160 high-definition games. The E&D team is carrying strong momentum into FY07 with anticipated growth expected to benefit from holiday sales of Xbox 360. E&D forecasts fiscal year 2007 guidance for Xbox 360 unit sales between 8 to 10 million consoles. The yearly guidance implies that by the end of the fiscal year we will have sold 13 to 15 million Xbox 360 consoles since launch.
  • Lastly, optimism runs high for a Games for Windows renaissance anticipated via Windows Vista, a launch expected to boost Windows gaming to new heights.