Let me clarify exactly what i meant was that on the sales of the console alone all 3 companies are taking a loss. In other words it cost more to manufacture then they make on the sale of the actually unit. Not the net gain/loss related to the console. And in fact i beleive that Microsoft's xbox division actually turned a profit in the last quarter due to the boost gained by Halo 2 and the boost in Xbox Live sales.
No, I understood -- but you're wrong. Both Sony and Nintendo are in fact making money for every console sold. Microsoft is still not. More below...
That having been said, the goals of Sony and Nintendo are completely different than the goal of Microsoft. MS believes that in the not-too-distant future, there will be one device that hooks your TV up to the internet / cable / video chat / everything else you can think of. That one device is going to have to be made by someone, and be run by something. They believe that the way to start getting these into people's house is to start in the video game market and then expand the services. Xbox Live is all part of the plan for making an online community that MS controls...
And then if they win or are a major player, ultimately they can charge a fee to the consumer each time they decide what movie to watch, or what game to play or whatever. It might not be too much -- lets say the fee is only a couple pennys each time... but 300 million people paying them a couple pennys a day would be a HUGE profit, and worth the entire investment that they have put into the Xbox to get their foothold.
Where exactly did this arguement come from?? I don't think this is relevant to the current disscussion but i'd love to debate you about this in another thread or in PMs.
It's relevant to the point that both Nintendo and Sony are in the market to make money now, while Microsoft has a long term plan. I don't remember the source exactly where it came from, but Bill Gates said something to that effect to shareholders when the Xbox was gearing for release. I've mentioned it more than once before on here because I find it such an interesting plan.
It is their long term strategy. It's brilliant really, but it is a pretty big risk. But Bill Gates is used to big risks, and he definitely has the money to risk it on this. Think about what has happened in the last ten years -- it is almost a definite that we will have some sort of box to connect us to the world that way. And if Microsoft can be there, they will.
Again even though those units are manufactured cheaper they are still costing more to manufacture.
here's a quote: " At about $149, Nintendo will roughly break even on sales of each GameCube, Harrison said."
Here's a link to the quote
http://www.firstcoastnews.com/onyour...1/gamecube.asp
Even though it's an old quote i find it hard to beleive that their manufacturing costs have dropped as much as the sale price of the console has. Even without serial port 2 and the digital a/v port the cost should still be higher then $99. Although I will concede that it was selling at a profit at the start. I can't find any stats on the current ps2 manufacturing costs, but i'll keep looking.
I'm sorry -- usually I have my sources around, but tonight I'm too tired to dig them up. I know that Sony was quoted as having stated that the reason for the PS2 redesign was so that they make more money on each console sold. It wasn't quite that blunt, but that was the point of it.
As more consoles are made, the cost of each goes significantly down. The basic idea is that to manufacture your first batch, you need to do all of the research and development, set up the factory and perform other start up fees that easily number in the millions. After the early adaptors have come on board and you have paid back a lot of your start-up fees, the cost drops rapidly as you only need to maintain the factories and pay the workers.
The reason the Xbox in particular has remained so expensive is the fact that Microsoft decided to use other people's parts inside it -- as has been noted, it is basically a compuer. So Microsoft is forced to pay a certain amount for hard drives, a certain amount for DVD drives, etc. The Xboxes that you purchase right now in stores have a 20 GB drive in them even though the BIOS can only access 6 GB. This is because all of the manufacturers stopped making 6 GB drives because they were obsolete. Microsoft is stuck purchasing a part that is more expensive because they aren't producing it.
Hopefully, that clears some stuff up. If I remember to, I'll go digging for my source on that Xbox thing in the near future. Must... sleep... now...