Microsoft Corp. (MSFT) will release the next version of its Xbox console in 2013 at the earliest, as the company squeezes at least one more year of sales out of its current model, said two people with knowledge of the matter.

The company may show the successor to its Xbox 360 in June 2013 at the E3 conference and put it on sale that same year, said the people, who declined to be named because the plans are confidential. David Dennis, a company spokesman, said earlier today that Microsoft won’t discuss new Xbox hardware at this year’s E3, quelling speculation that the device would be unveiled at the 2012 show.


A Microsoft Corp. representative demonstrates an Xbox Kinect video game at the Electronic Entertainment Expo (E3) in Los Angeles, California, U.S., on Monday, June 6, 2011. Microsoft Corp. said it struck an agreement with Google Inc.'s YouTube to deliver video on the Xbox Live service, as the software maker lines up a live television service for later this year.

Microsoft’s Xbox 360, bolstered by the Kinect motion-sensor accessory, had its best year of sales in 2011 -- the console’s seventh on the market. Announcing the next model too soon risks hurting orders for the current lineup, and new consoles typically lose money for their first few years. The Xbox 360 is profitable, giving the company incentive to keep it on store shelves for a longer period.

“They’re still selling a lot of Xbox 360, and they’re making money,” said Michael Pachter, an analyst at Wedbush Securities Inc. in Los Angeles. “I don’t think the world needs them to put a new console out just because we’re bored.”
Sales Growth

Microsoft’s entertainment division, which includes the Xbox, posted a 45 percent sales gain to $8.91 billion in the fiscal year that ended in June. The Xbox 360 outsold Nintendo Co. (7974)’s Wii and Sony Corp. (6758)’s PlayStation 3 in 2011, and also sold better than any other TV-connected devices, including DVD players and home-theater systems, Dennis said.

“There will be no talk of new Xbox hardware at E3 or anytime soon,” Dennis wrote today in an e-mailed statement. He declined to say when Microsoft would release the next model. “For us, 2012 is all about Xbox 360.”

Microsoft has no reason to put out a new console soon, Pachter said. He estimates that the company makes about $115 of profit on the $300 Xbox 360, a model with a hard drive.

Pachter expects Microsoft to release the next version at the end of 2013 or beginning of 2014. The company will probably look at competitive pressure and sales in the current year to determine timing, he said.

Nintendo, meanwhile, is due to release a new machine called the Wii U later this year. Sony will probably update the PlayStation around the same time Microsoft puts out a new Xbox, Pachter said.