The market’s reaction to the $1.1 billion of warranty charges that Microsoft (MSFT) is taking for defective Xbox hardware may have missed the point. The charge covers about 13 billion Xboxs.

But, what does that mean to the division that handles the Xbox at the world’s largest software company?

Last quarter, the Entertainment and Devices division of Microsoft had total revenue of $947 million. The unit lost $330 million.

The Xbox warranty charge is more that the entire revenue of the division for the last quarter.

Douglas A. McIntyre

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