[Terpfen]

Pst... an $84 million profit on $1.37 billion revenue for the Entertainment and Games division does not confidence create. Halo 2 sold 6.5 million copies and the Xbox outsold the PS2 since August (thanks in part to Sony's strategy of deliberately undersupplying the market to create demand in anticipation of their PS2 redesign), yet they only made an $84 million profit?

You can get the E&G division isn't celebrating, just wiping their brows.

Now let's see how the rumors of Microsoft ceasing Xbox manufacturing in anticipation of the Xbox2's release turn out.

[KwasiOwusu]

"Pst... an $84 million profit on $1.37 billion revenue for the Entertainment and Games division does not confidence create"

XBOX turning in its first profits creates plenty of confidence alright.
Last year, CFO Connors predicted that XBOX wouldn't even be profitable at all in this iteration.
Game consoles always make losses or low profits to start off with, until they get well established.
With XBOX live now having 1.4 million users, a very adequate installed base, games flying off the shelves, and even more great games coming this year, the XBOX will just grow from strength to strength right into when XBOX 2 is released.

Besides Microsoft can afford it.

With a record net income of a massive $3.40 Billion, Microsoft easily makes far more profits than Sony or Nintendo and can outlast them in any price war.