During its Q3 earnings report, Microsoft announced that Xbox live subscriptions have reached 46 million worldwide - an 18 percent increase from last year - and that it has sold 1.3 million consoles over the past three months - down nine percent from the same period a year ago. Microsoft's Entertainment and Devices Division revenues rose 56 percent to $253 million despite the drop in console sales.
Microsoft did not have a lot to say about its next console system, but did reveal in its earnings report that growth in operating income had been offset by a 28 percent increase in research and development costs, which totaled $113 million.
"The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox Live, and Skype," said Microsoft CEO Steve Ballmer. "While there is still work to do, we are optimistic that the bets we've made on Windows devices position us well for the long-term."
Microsoft is expected to hold a press conference in May detailing the new system that will go head-to-head with the PS4 and the Wii U in the next-generation console cycle. That cycle begins in the fourth quarter of this year with the release of the PS4.