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Microsoft Loses $126 Per Unit on XBox 360

Posted by CmdrTaco on from the so-we-should-buy-more-right dept.

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."

4 of 725 comments (clear)

  1. Re:Selling The Hook by Godeke · · Score: 5, Informative

    Actually, until Microsoft and the X-Box, the "lose money on the hardware" idea was a myth:

    http://www.actsofgord.com/Proclamations/chapter02. html

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    Sig under construction since 1998.
  2. Re:Don't calculate the loss from the retail price by Detritus · · Score: 5, Informative

    Not on game consoles. The markup is almost zero.

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    Mea navis aericumbens anguillis abundat
  3. Not True. Just more FUD. by CDPatten · · Score: 4, Informative

    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.

  4. Actually by nmb3000 · · Score: 5, Informative

    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.

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