From gamasutra.com:

Microsoft on Friday revealed flat year-on-year sales for its Entertainment and Devices Division, which houses Xbox, but operating income rose 96 percent to $312 million.

EDD revenue for the first fiscal quarter ended September 30 was $1.89 billion, virtually identical to a year ago. The EDD also includes the Zune media player, PC games, online games, and other products.

Microsoft attributed the sharp rise in profits to decreased operating expenses, primarily stemming from "decreased Xbox 360 platform costs." A lower headcount in the division compared to a year ago also contributed to the higher profits.

The worldwide Xbox 360 installed base is "almost 34 million consoles," Koefoed said, adding that it leads the industry with an 8.7 software title attach rate. Xbox Live revenue growth grew "in excess" of 50 percent, he said.
Full Story: gamasutra.com