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

The Numbers Don't Add Up

[duerra]

That price is ridiculous. I've read on IGN that the license fees for games tend to be around $10 per disc. This would mean that to make up the lost money on each console sold, each customer would have to purchase 13 games.

I'm thinking that the average box doesn't have 13 games sitting next to it... (not at first, at the very least).

What console hasn't been sold at a loss?

[idburns]

Just about every gaming console created has been sold at a loss. This is nothing new.

Re:Not True. Just more FUD.

[Damvan]

And Merrill Lynch is some kind of bastion of impartiality and trust?

Come on, they have a reason the results of their study go one way. Who sponsered their study?

actually probably losing much more,

[circusboy]

Given that retail markup is usually around 100%.

Even if substantially less, there is no way that Microsoft is actually getting $399 on a unit sale.