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Microsoft Loses $126 Per Unit on XBox 360
ahess247 writes "BusinessWeek has taken a look at the insides of the XBox 360 and with the a little help from market researcher iSuppli determined that Microsoft is continuing its tradition to taking a big loss on the console in hopes of making a profit on games. From the article: "An up-close look at the components and other materials used in the high-end version of the Xbox 360, which contains a hard drive, found that the materials inside the unit cost Microsoft $470 before assembly. The console sells at retail for $399, meaning a loss of $71 per unit -- and that is just the start. Other items packaged with the console -- including the power supply, cables, and controllers -- add another $55 to Microsoft's cost, pushing the loss per unit to $126."
So why is it that there was so much controversy about Microsoft killing Netscape by bundling IE with Windows, but everyone seems cool about them doing this (and indeed predicted it)? Is it just because Sony and Nintendo will inevitably do the same, so we don't have a true underdog to root for?
Actually, until Microsoft and the X-Box, the "lose money on the hardware" idea was a myth:
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http://www.actsofgord.com/Proclamations/chapter02
Sig under construction since 1998.
Not on game consoles. The markup is almost zero.
Mea navis aericumbens anguillis abundat
No. They lost nearly $400,000,000 last year on the Xbox division, including games sales.
They're probably around $4,000,000,000 out on the whole Xbox venture, so far.
Their only profitable quarter was the one due to the release of Halo 2.
They're damaging Nintendo (a pure games company) - do you really think Nintendo were or are able to compete? If not, then how is this not anti-competitive? And is this behaviour good for gamers in any case?
Keep buying the Xboxes new and the games secondhand - together we can kill Microsoft!
Not $10 per disc bought.. $10 per disc pressed.
Sony tends to lose a little money on each console for the first 6 to 12 months of sales and then as production volumes and process improvements come into play, they start seeing a small profit on the consoles, even as the prices get cut through the lifespan of the console. They're willing to eat a little of their potential profits to get the box out into the market. Now, Microsoft's blowing money left and right by comparison.
I am not merely a "consumer" or a "taxpayer". I am a Citizen of the State of Texas
"Lose money on the razor, make it back on the blades" doesn't get re-defined as "predatory" just because it didn't work very well on the first attempt.
To be predatory, they would have to sell the X-Box cheaply enough that almost nobody would want to buy anything else. That's clearly not what they are doing here.
Information wants to be anthropomorphized.
Wrong. The hardware manufacturer sells them at cost. The service provider may subsidize the phone for you, but the manufacturer isn't losing money. (With the price of phones, they're probably making ridiculous profits.) The service provider has just adjusted their prices so you pay the $200 back in the plan.
Don't think of it as a flame---it's more like an argument that does 3d6 fire damage
Its interesting, irritating, and I guess expected. When an op-ed for a newspaper puts out financial numbers the post subject is fact. But when Merrill Lynch, one of the countries biggest financial institution puts out a report, Slashdot has a "?" to it. Check it out here.
What is the difference you ask? Well one doesn't say MS sucks and the other does. One compares both PS3/Xbox with numbers and the other doesn't give any. Anyone interested in more accurate PS3/Xbox 360 breakdown you can go here (or here to get the chart). Again these numbers are according to Merrill Lynch a leading investment firm, (not a newspaper or an op-ed).
Take a look at them before you flame me.
I'm not sure this study is correct.
Merrill Lynch looked at both the 360 and the PS3 and found these results.
The short end of it is that the "full" version of the 360 costing $400 at launch is actually making money.
"What do you despise? By this are you truly known." --Princess Irulan, Manual of Muad'Dib
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