Microsoft's (MSFT) game business finally gets it right

After over four years and billions of dollars in losses, Microsoft (NASDAQ: MSFT)'s game division has finally started to make money. Although Wall Street was disappointed with some of the software company's numbers for Windows and Office, the firm's "entertainment and device" division made $89 million on $1.58 billion in revenue. In the same quarter last year, the operation lost $324 million on $936 million in revenue.

According to the company, "Cumulative console sales surpassed 19 million during the quarter, up 74% from a year ago. Server and Tools revenue growth of 18% added to its string of consecutive double-digit revenue." The Xbox has finally arrived.

The news shows that Microsoft is willing to spend massive amounts of money to enter a business and stick to it. When the Xbox was launched, Sony (NYSE: SNE) ruled the game business and there was no reason to think that Microsoft could do well. Gaming could not take advantage of Microsoft's core strengths in PC and server software. The move was an attempt at diversification.

After all the years of battling, the Xbox 360 now outsells Sony's PS3 in most months. If the software company could only make money on MSN.

Douglas A. McIntyre is an editor at 247wallst.com.