Microsoft losing $126 per Xbox 360 unit

[JayBee74]

Sorry if this is old news. Story from Gizmodo [gizmodo.com]

"The few days since the official release of the Xbox 360 have given enough time to curious engineers to dismantle the thing and provide an entire cost analysis. Altogether, the parts cost for the Xbox 360 Premium is $525, over $100 more than its retail price tag. Now unless Microsoft is behind all of this eBay nonsense, then the company is definitely taking a hit on all of the units sold. I guess they expect to make it up with game sales, but this maybe shows a grim chance of the unit ever going down in price. The Xbox 360 sells at 399$, while it costs 525$. Ah well we saw it in the past and Microsoft does it again. Only this time I'm afraid the margin is a bit high. Think about how many games you would have to sell to regain that lost 126$, should be 3 or 4, maybe more. And if this little story continues where people are already hacking/pirating Xbox 360 games after two days, Microsoft is in deep trouble.

The triple core IBM CPU used in the Xbox runs at 3.2GHz, the lads reckon. This CPU costs $106 and that represents 20.2 per cent of the bill of materials (BOM) for the console.

Add in the other integrated circuits and the BOM is a staggering $340 per console. ]

[CMH]

Re: Microsoft losing $126 per Xbox 360 unit

Who cares?

Every system is sold at a loss. Any console maker that doesn't know that is bound to head into SEGA territory.

[JayBee74]

Re: Microsoft losing $126 per Xbox 360 unit

I don't really care, just thought I'd share the info. They are saying that the loss per unit is a little high, but that loss could be exagerrated anyway, if the parts of the 360 actually don't cost Microsoft that much.

[nemesis04]

Re: Microsoft losing $126 per Xbox 360 unit

I am sure that is not the true cost for the 360. Parts on a individual basis may add up to $525 but when Ms secures orders for parts from suppliers which range up to several million, there is cost reduction.

Also, $399 is the retail price for the unit. Ms has a cost it is selling to retailers. Retailers are not paying $399 for the unit. I am sure Ms is losing some money but I it is not costing them $525 a unit to build.

[CMH]

Re: Microsoft losing $126 per Xbox 360 unit

I don't really care, just thought I'd share the info. They are saying that the loss per unit is a little high, but that loss could be exagerrated anyway, if the parts of the 360 actually don't cost Microsoft that much.

Nah, thank you for the info. I didn't mean I didn't care what you had to say, but I don't care what the analysts have to say. They seem too worried about now without taking into consideration the past.

[dkgojackets]

Re: Microsoft losing $126 per Xbox 360 unit

they could always sell it for more since people have proven they would pay it from ebay

[nkhera1]

Re: Microsoft losing $126 per Xbox 360 unit

So then they make most of their money from games and add-ons?

[CM1847]

Re: Microsoft losing $126 per Xbox 360 unit

I am sure that is not the true cost for the 360. Parts on a individual basis may add up to $525 but when Ms secures orders for parts from suppliers which range up to several million, there is cost reduction.

Also, $399 is the retail price for the unit. Ms has a cost it is selling to retailers. Retailers are not paying $399 for the unit. I am sure Ms is losing some money but I it is not costing them $525 a unit to build.

Retailers make little to no money off of the systems as well. Best Buy employees get a % off of the cost the store buys it's products from, and with all consoles the employees only get maybe a couple of bucks off. I would guess MS sells the systems to retailers for right around the $399 price. The retailers just want the systems so people will pretty much have to buy a game and possibly accessories when they pick up the console.

And yes, MS makes it's money off of games and accessories. I'm sure they are getting a pretty penny from XBL accounts as well.

[Nivek]

Re: Microsoft losing $126 per Xbox 360 unit

Who cares?

Every system is sold at a loss. Any console maker that doesn't know that is bound to head into SEGA territory.

Xactly.

[bryan_05]

Re: Microsoft losing $126 per Xbox 360 unit

So then they make most of their money from games and add-ons?

Yes. Selling game licenses and hardware licenses helps them make the $$$

[JRod]

Re: Microsoft losing $126 per Xbox 360 unit

Yes. Selling game licenses and hardware licenses helps them make the $$$

Don't forget the add-ons. If you buy a Core system and upgrade it so its exactly like the Premium you'll probably end up spending $500.

[JayBee74]

Re: Microsoft losing $126 per Xbox 360 unit

Yeah, I think 3rd party developers have to pay Microsoft $7-10 for every game they sell for XBox and XBox 360. And of course they make even more off their own titles.

[dagger55]

Re: Microsoft losing $126 per Xbox 360 unit

im sure its not $126 per....

im sure MS got some sweet deals for buying MILLIONS of the same pieces

[CoRruPt-]

Re: Microsoft losing $126 per Xbox 360 unit

I'm sure this would all just factor into a small dent of the MS bank account anyways. Remember people, they don't solely depend on consoles to survive, so let them lose $ . Besides, like everyone else had said, their acc's, XBL, etc will eventually fill the deficit and then some.

[Ice Cream Truck]

Re: Microsoft losing $126 per Xbox 360 unit

Who cares?

Every system is sold at a loss. Any console maker that doesn't know that is bound to head into SEGA territory.

$126 loss on every system? Console makers lose money on their consoles but not that much. Really.

But it doesn't matter how much money Microsoft loses, they can afford to lose that much.