Microsoft's Entertainment and Devices division generated $3.8 billion in revenue during the last three months of 2012, down 11 per cent year-over-year as the market awaits the company's next generation console.
But a significant decline in marketing costs meant that the entertainment division - which bundles fiscal data for Windows Phone, Xbox and other devices - managed to increase its profit (before tax) by 15 per cent to $596 million.
Specifically with regards to the Xbox platform, Microsoft made $1.1 billion less than last year - a drop of 29 per cent. The company shipped 5.9 million Xbox 360 consoles during the period, down from the 8.2 million issued last year.
"This was due mainly to lower volumes of consoles sold and lower video game revenue," the platform holder said.
Across the whole Microsoft business, the company reported $21.5 billion in revenue and $6.4 billion in profits.
As the industry awaits the next generation Xbox reveal, Microsoft disclosed that its research and development expenses for the quarter hit $98 million.
Further reading: When will next gen be announced?