Microsoft Isn't Done With the Xbox 360 Yet

Source: Microsoft.

The Xbox 360 is about to be old news, but Microsoft (NASDAQ: MSFT  ) has big plans for the system. Mr. Softy told analysts at the Citi Global Technology conference this week that it will keep supporting the console until 2016, including with more than 100 new games over the next few years. It seems that there's a lot of business still tied to that aging piece of hardware.

For example, among the new titles set for release is Take-Two Interactive's  (NASDAQ: TTWO  ) Grand Theft Auto V, coming to the Xbox 360 and Sony's PS3 starting Sept. 17. The GTA franchise has been a big winner for Take-Two, selling 127 million units over its life to date. And even though there hasn't been a major new chapter released since 2008, the brand was still responsible for 20% of the company's revenue last quarter. A big hit in GTA V will boost Take-Two's profits, but it will also help this generation of consoles go out with a bang, not a whimper.

GameStop (NYSE: GME  ) has to be happy about the longer life cycle too, since it will take some time for a vibrant used-game market to develop for next-gen systems. The retailer will need Xbox 360 and PS3 trade-ins to prop up its stellar margins on used software and hardware. And with both Microsoft and Sony planning to support their prior systems for years, GameStop is in the right place at the right time. It can benefit from selling activity around both generations of consoles. That prime positioning is one reason the stock's epic run higher over the last year makes some sense.

For its part, Microsoft would be crazy not to keep throwing resources into the Xbox 360. It has a huge installed base and is comfortably ahead of rivals in this last lap of the race between it, Sony, and Nintendo (NASDAQOTH: NTDOY  ) . Mr. Softy's console sold 140,000 units just in June, better than any other system -- and better than Nintendo could manage with its Wii U for the entire second quarter. Overall, Microsoft has sold a total of 23 million units of the console just over the last two years.

Plenty of attention this fall will be focused on the next-gen battle between the Xbox One and the PS4. Microsoft's $500 price point and PR missteps have some investors worried that it might stumble out of the gate. However, continued brisk sales of the Xbox 360 could take some of the sting off a weak Xbox One launch. 

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