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XBox + UltimateTV for $500
Daetrin writes "Red Herring reports in this article that Microsoft is planing on combining the XBox with their UltimateTV Recorder with a projected final cost of about $500. The article also talks in some detail about the massive (though partially expected) losses that the XBox is costing Microsoft. There's also another article on Yahoo that sums up what Red Herring said."
"Massive" losses? I don't see "Massive" losses in the article. I see statistics describing a 3.3 billion loss over ten years, for a company that has 50 billion in the bank and is reportedly now getting a $10billion/yr net profit? That's not massive, not relatively.
Of course, if regulators decide post-enron that balance sheets should be more explicit, and you suddenly have to do things like count employees as being paid even though you're paying them in stock options instead of money, some amount of that may evaporate.
But either way. Microsoft has more than enough money to buy users. So they will. And it will be nothing more than a small wincing pain to them.
From the Yahoo/Reuters report:
All three companies make losses on their hardware products, but make up those losses with sales of higher-margin software.
Of course, only Microsoft is losing money on the X-Box, but the myth that all console makers routinely sell their hardware at a loss is pervasive. It just ain't so.
With older tivo's available at bargan basement prices of $99 to $150 and many other alternatives available, who are they after? The parents surely dont want the kids to have their own pvr or spend that money on them... the hardcore adult gamer is a very small segment of the total console gamer population (Look nintendo is targetting kids... little kids... there's a reason for this) Along with this the PVR market is having trouble... most stores are dropping PVR's (you cant get a tivo in best buy or circuit city anymore...) as the sales are prett much over with.. everyone who wanted a pvr has one, everyone else isnt buying them or are waiting for someone to make one that doesnt require a service.. (Do NOT tell me the Tivo will work without it.. until they give me a way to set the clock without having it ever dial in to the company with all my viewing habits I dont want their crap.) or who look at the device and say.. "MY $99.00 VCR does that. why should I buy something expensive that I cant just keep that tape of that show/movie/porn feature?"
I really want to know what they think will gravitate people to this? they killed the Ultimate TV project because of dismal sales.. do they think that combining a poor selling product to a good selling product will result in a stellar product?
Do not look at laser with remaining good eye.
They do all kinds of fun things with the warthogs.
Interesting - Sony & Nintendo designed their units from scratch so as they ramp up their production volume of custom chips they get sizable decreases in cost.
Microsoft went with mostly standard parts which already had sizeable production volumes, so there wasn't nearly as much room for their cost to drop down. Even worse, their CPU speed is now lower than anything sold in the PC market, so Intel is seing overall volumes of that chip drop, meaning costs can't get any lower. Likewise the small (by PC standards) hard-drive they use. RAM prices were dropping but have slowed lately. Throw in the custom video/audio/system chip that NVidia did for them - for which NVidia & MS are in court over chip pricing - and that's the bulk of the cost.
Maybe it's just me, but it looks like MS painted themselves into a corner. Because so many of their components were already "volume-discounted" from day one they have far less room to lower costs. Meanwhile Sony is supposed to combine the two main chips in the PS2 into a single chip to drive down costs even more - something I don't think MS could get NVidia & Intel to do - and I think MS has a lot more pain to come.
First up here's a Karma-whoring link to an in depth article about the profit/loss of each company selling games consoles:
0 2. html
http://www.actsofgord.com/Proclamations/chapter
Secondly I don't really believe either Microsofts maths for the Xbox, or Dean Takahashi's (he was the author of 'Opening the Xbox', which is alledgedly an outside view of the Xbox development process, but is actually really only about glorifying Seamus Blackley, one of the original xbox designers).
The article claims that each Xbox cost $325 (which is below the $375 that other analysts have come up with), and that each Xbox is sold to retail at $175, leaving a massive margin of $24 or 12% for the shop, which is much below the 15-20% that shops expect.
Also none of Mr Takahashi's articles (or any others) mention the huge bribes^H^H^H, joint marketing schemes that Microsoft makes available to companies that want to develop Xbox games. I've heard rumours from a company that I used to work for (codemaster.com) that Microsoft would give up to $3 million for a game to be ported to the xbox, mulitply that by 100 games that they want, and you've got a whole load of cash.
But anyway I doubt real figures for how much the Xbox costs microsoft will ever come out, as they have enough accountants to obsure the real figure, from their shareholders, who ought to be asking why Microsoft are willing to spend $4-6 billion, when most of the games industry have always said that they never had a chance to beat Sony.
"Free software as in beer, copy protection as in racket" - Telsa Gwynne
Six months ago The Guardian asked Xbox's general manager, J Allard, about the XBox including PVR technology in the future. His response:
;)
"We are not confused: this is a single-function device entirely focused on the games market. We have to focus on creating great games."
I assume they thought twice when they saw the sales figures
The store is Electronics Boutique. I just took advantage of this deal and picked up an XBox. However, I'm pretty sure it's not part of the "Evil MS Conspiracy".
The deal is that you trade an old N64, Dreamcast or PS1 for $30 of trade-in value. Then each N64, DC, or PS game (up to 10) you trade in with the bundle will be worth at least $7.00. This is nice because if you have a lot of old games which are normally worth $1-$2 in their database, they will bump up the value of each game to $7. Games need boxes/cd cases and instructions, but the consoles themselves don't need anything except the necessary cables and controllers.
You could theoretically go to Gamestop or Funcoland and pick up lots of old crappy games for a few dollars each and trade them in for $7.00 each. You can trade in more than 10 games, but they'll only bump up the value of the first ten.
This promotion is for credit towards ANY new console. You do not have to buy an XBox. You can choose a Gamecube or a Playstation 2 if you prefer. From what I've heard, this deal lasts until June 30th. If interested, call your local Electronics Boutique.
Check Fatwallet for details. Personally, I got rid of my old PSX since I already have a backwards-compatible PS2. I also dumped a bunch of really cheap PSX games, and some free Dreamcast games that I got through promotions.