Microsoft’s fourth quarter and annual report was released today. In the Home and Entertainment division, Microsoft reported that they “sold approximately 5 million Xbox 360 consoles during the fiscal year.” Of course, because Microsoft takes a loss on each Xbox 360 sold, this meant that year over year, their losses in the division widened. While the net operating loss can not be wholly attributed to the Xbox 360, Microsoft lost approximately $414 million for the quarter and about $1.26 billion for the year. Aside from the Xbox 360, Microsoft saw some growth from PC games like Age of Empires III.

With the amount of losses sustained by Microsoft during the past fiscal year, it is clear that the company is willing to take a large monetary hit to try and take the market from Sony. Microsoft has repeatedly said that they plan to have a 10 million unit head start on Sony by the time the Playstation 3 launches. With 5 months to go they are half way to this goal. While the summer season is typically slow for video game sales, it would seem Microsoft would have to ramp up Xbox 360 sales to reach this milestone. Still, it would seem that Microsoft is in good shape in terms of preparation for this holiday season.