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."

Comments

Re:Selling The Hook

[Godeke]

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

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

Re:Don't calculate the loss from the retail price

[Detritus]

Not on game consoles. The markup is almost zero.

Actually

[nmb3000]

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.