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Microsoft Looks To Cut Xbox Costs
Thanks to an anonymous reader for pointing to The Register's article on Microsoft's resolution to reduce the cost of goods sold in its Xbox division. This news is a byproduct of Steve Ballmer's recent internal Microsoft memo urging greater competitiveness, but the article elaborates a little - "Microsoft makes a significant loss - thought to be over $150 - on each Xbox console it sells... significant steps have already been made in slashing Xbox production costs, including moving manufacturing to China from Hungary, and replacing some components with cheaper alternatives." But this is about reducing Microsoft's financial loss per console, not reducing the amount the consumer pays, so, as the article indicates, "..further [Xbox] price cuts seem unlikely in the near future."
$150 per console loss and now they're trying to lower the price? They must be getting desperate after having...
Close by wrong. They are trying to reduce the cost of producing the X-Box, not reducing the cost to the comsumer (ie. they'll loose less money).
Read the last two sentences of the article.
It's amazing how much cheaper chips and hard drives have both become in the last two years...
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They've moved from Hungary to China.
No, but seriously changing the hardware design would break quite a few games. The only thing that they could probably do safely would be to switch to a NForce2 chipset board with a custom IGP (it needs to support shaders at least as well as the GeForce3.5 in the XBox). The XBox is actually quite similar to the NForce platform.
While chips and drives have come down in the last two years, you really haven't seen a significant decrease in the cost of 700MHz CPUs and 8GB hard drives, because neither was cutting-edge at the time. The 700MHz CPUs probably are only being manufactured for MS, both because they are not the same as the off-the-shelf 700MHz P3 that people might have bought a couple years ago, and because they simply aren't producing chips that far from their highest clock-cycles. There might still be a few companies producing 8 GB hard drives, but frankly, most of them aren't even producing platters that small any more (and I wouldn't be surprised if the XBox hard drives had larger platters than they are using, at least in the newer ones). Hell, I haven't bought a hard drive that small in almost 5 years. The graphics chip is a special build as well, though it's possible that nVidia is still producing comparable chips for the general market.
A lot of it comes down to the more common components, like IDE controllers, USB, and so on. The RAM in the system has probably come down in price as well. Other than that, they could've found a more efficient manufacturing process, or some chips that helped make it more efficient. Reducing the size and/or number of layers of the backplane would usually help in the long term, as well.
-PainKilleR-[CE]