It always amazes me how many people actually think that the Xbox is a highly profitable endeavor for Microsoft. While it has turned profitable recently, the Entertainment & Devices Division (where XBox is accounted for) is only mildly profitable. Nowhere near the profit rate of Microsoft's enterprise and desktop cash-cows. It is a stretch to call the Xbox a fiscal "success", at best one could now say it is not "money-losing". It is highly unlikely that Microsoft could expand the revenues and margins of EDD into a company-sustaining business.
That is because the division includes Windows Phone which isn't making much profit right now, not to mention $250 million of cash payments to Nokia every quarter cutting into the profit.
Even with that, they still make a tidy profit.
The EDD reported revenue of $2.53 billion, a 56 percent increase over the $1.61 billion reported during the same period last year. The company also cited a "video game deferral" of $380 million – an advance on the launch of Halo 4, according to Gamasutra – effectively lowering revenues to $2.15 billion. Even so, the EDD racked up an operating income of $342 million, Xbox Live subscriptions rose, however, as did Xbox Live revenue. Specifically, Xbox Live membership grew 18 percent and now totals 46 million members.
So when people say the Xbox is highly profitable, they're right. And EDD would do very well on it's own, even with Windows Phone, with a profit of $342 million just in one quarter. Only on Slashdot does someone think a hypothetical company that makes >1billion profit in a year is not "sustaining".