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Xbox Sales Strong Despite Heated Competition

The debuts of PlayStation 3 and Wii do not deter Microsoft's entertainment division from carving out $2.96 billion in revenue in the quarter.

Microsoft Xbox sales remained strong during the software maker's second fiscal quarter, despite Sony and Nintendo releasing upgrades of their rival game consoles.

The Xbox, along with sales of Microsoft's server software, lifted the company's revenues 6% during the quarter reported Thursday. Microsoft profits fell 28% because of the delay in shipping Windows Vista. The major upgrade of Microsoft's operating system, a cash cow along with the Office productivity suite, is scheduled to be released to retailers Jan. 30. Business versions of the software have been available since November.

Sony and Nintendo launched PlayStation 3 and Wii, respectively, in November, a year after Microsoft released Xbox 360. Despite strong demand for the rivals' products during the holiday season, Microsoft held its own.

Microsoft's entertainment division, which includes the Xbox console and software, generated $2.96 billion in revenue in the quarter, up 76% from the same period a year ago. Microsoft launched Xbox 360 in the fiscal second quarter in 2005, along with Microsoft SQL Server 2005, Visual Studio 2005 and Dynamics CRM 3.0. During the first year of sales, the products contributed more than $1 billion in sales.

For the quarter ended Dec. 31, 2006, Microsoft reported total revenues of $12.54 billion, and profits of $2.63 billion.

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