December Was Biggest Month For Xbox 360 Ever -- Five Years After Launch

Xbox 360 Kinect kids

Photo: Associated Press

It looks like Kinect did more than create a new billion-dollar business for Microsoft: it also drove sales of the Xbox 360 to their highest point ever.According to NPD numbers trumpeted on Microsoft’s TechNet blog, the company sold a record 1.9 million Xbox 360s in the month of December.

That’s amazing because the console has been on the market for five years — it launched in November 2005. In the past, consoles only lasted four or five years before being replaced by a new generation.

One of Microsoft’s hopes with the Xbox franchise was to lengthen the console cycle. At launch, Microsoft — like every other console maker — pays top dollar for components, and loses money on every box sold. Over time, those costs come down, and each user buys a number of games, which are profitable. The longer the console stays on the market, the lower the costs get, the more games per user are sold, and the more money Microsoft makes.

That’s why Microsoft has added other non-gaming functions like ESPN sports and Netflix video — they make the Xbox an essential part of the living room, rather than a mere game machine that the teenage son of the house will outgrow after a couple years.

But in fact, it turns out that the best way to keep the console alive is to add new gaming functions. With Kinect, it’s almost like the Xbox became a brand new machine.

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