Fri, 25 Nov 2005

Microsoft loses $126 on each Xbox 360

This is the first thing I've read that makes me want to buy one ... and set it in the closet.

Redmond will sell every Xbox console at a big loss, says researcher iSuppli. Not to worry; the profit is in the associated software.

(link) [CNET News.com]

/Technology | 1 writeback | permanent link

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On 11/24/2005 09:18:39
Starlight Bunnybutt wrote

Losses are smaller than they appear

Most consoles are loss areas, where the creator makes it up in licensing and games. Some of the figures that are pulled up for the loss are innacurate though. When the Playstation 2 was first unveiled, rumors had the loss at over $150 each system, which was false. Since Sony had manufactured all the parts themselves, and assembled the system themselves instead of using third party parts and labor, the loss was well under $100 per system, which was quickly regained with market saturation and the strongest lead in game popularity. Retailers lose out initially on system sales, because there is no margin on the consoles themselves, but they quickly recoup with brisk game sales and sales of accessories. Platform manufacturers also make a brisk trade in accessories, and then they are forced to relinquish some of their monopoly to third parties making accessories. Gah, that was just extremely geeky, I know a ton about this because when the PS2 was first released my boyfriend was working in electronics stores. We're dedicated Playstation fans here (despite Sony's anti-consumer practices) so we greet the new Xbox with a hearty 'pbbbbllllt!'

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