Microsoft's Entertainment and Devices Division has enjoyed stand out profits for the second quarter ended December 31, up from $130 million to $375 million.
The division, which includes Xbox 360, Games for Windows and Zune, saw revenue fall from $3.2 billion to $2.9 billion.
The company shipped 5.2 million Xbox 360 consoles compared to 6 million in the previous quarter. Revenue from hardware and software declined 12 per cent to $295 million due to lower product sales - with the company pointing to tough comparisons for two games in the previous period, and price cuts on the Xbox 360.
Manufacturing and marketing costs were down for the period, and the company benefited from higher margins on Elite and Special Edition hardware.
For the overall Microsoft business, profits were up 60 per cent from $4.2 billion the previous year to $6.7 billion. Revenue was also up 14 per cent from $16.7 billion to $19 billion.
The company noted 60 million Windows 7 sales, claiming it to be the fastest-selling operating system in history.