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Thread: MS loses $127 per every xbox 360 made

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    Great Puma (Level 12) Sylentwulf's Avatar
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    Default MS loses $127 per every xbox 360 made

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    Key (Level 9) THATinkjar's Avatar
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    Honestly, it is $126...

    Anyway, I thought it would be more, to be honest, but that is still damn bad. Honestly, they'll have to really sort things out and drop that price if they're to have any hope of making some money on the hardware. I'm sure the accessories (another reason for the two bundles) and games will reap their rewards, though.

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    Hmm, without actually looking at Microsoft's internal documents, this should seriously be taken as a very educated guess, not fact. It could be substantially lower or higher than this.

    Factor in support, advertising, R&D, the legal department, and misc. other expenses, it's probably costing MUCH more per unit sold at this time. Which is exactly what Microsoft was expecting, I'm sure.

    It's a gamble I suppose, to hit critical mass where people are shelling out enough for rehashed titles and Live access that they start to generate some actual profits from this. Xbox1 was still losing tons of money, and now it's obsolete.

    In a wider strategy, I wonder if they even intend for 360 to ever become profitable, or if it's just a 'finger in the dike' move to try to keep threats to Windows and other Microsoft cash cows from gaining wider acceptance. I'm sure they could be nervous about tens of millions of linux-ready HD multimedia boxes having the potential to move people away from Windows. Taken this way, this could be a shrewd defensive strategy by Microsoft.

    Personally, I run BSD or Fedora Core 4 most of the time, and for games that can't/won't do Linux, I boot into XP32 (seperate drive).

    It's not inconceivable that PS3+Linux could represent the most serious threat to Windows dominance in homes that has ever existed. Of course this will depend entirely on the ease-of-use and attention given to this area.

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    I doubt that will hurt Bill Gates' wallet. If memory serves me correct the PS2 lost loads of money on their console for a time, and only made money off the games and accessories. I don't really think MS goal here is to get rich off of the 360 they just want to dominate another market, and if they take a loss no biggie they can just write it off on their taxes.
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    Correct me if im wrong but didnt the original xbox not make any profit either?

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    Quote Originally Posted by Johnny_Rock
    Correct me if im wrong but didnt the original xbox not make any profit either?
    You are correct. It has lost them four billion dollars and counting. Pretty funny, really.

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    I heard it was 76 per console?


    Isn't i going to retail for 350 dollars in Japan?
    (they only get the premium package there)

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    Alright boys and girls, I dont know how this gets past so many people, but let me refresh your memory.

    Money is NEVER made on consoles. EVERYTHING is the software. Thats where the profits are at. Its worth it to lose X on each console if they make 3 times that on a multimillion selling game. Halo 1 & 2 anyone?
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    Quote Originally Posted by Mr.FoodMonster
    Alright boys and girls, I dont know how this gets past so many people, but let me refresh your memory.

    Money is NEVER made on consoles. EVERYTHING is the software. Thats where the profits are at. Its worth it to lose X on each console if they make 3 times that on a multimillion selling game. Halo 1 & 2 anyone?
    Gross overgeneralization is not your friend.

    Microsoft is still admitting massive losses on the entire Xbox project, not just on the console.

    I mean, say they sold 50 million copies worldwide, at an average retail price of $50, with the margins bringing Microsoft back a raw $30 on each copy. That adds up to 1.5 billion in income. This certainly does NOT put a substantial dent in the billions lost each of the last 5 years on the Xbox project. R&D, advertising, exhorbitant initial mfg costs, service and support, etc.

    Also, the NES, SNES, Gameboy, Genesis were all highly profitable per unit. The PS1, PS2 became profitable after the component prices fell some. With the increased level of complexity of modern consoles, it's likely that the window of loss/break-even will extend even further. With hard drives, cd/dvd drives, highly specialized video subsystems, etc, prices are undeniably increasing.

    There is a danger (evident in the first Xbox) that you will continue to lose money over the entire feasible lifespan of a console, in terms of unit cost vs. selling price. This is not true for all units.

    I think Microsoft's big chance to make 360 profitable is going to be testing the bounds of how much they can rake in off of Live and online content, in addition to the handful of huge titles (Halo 3) that will contribute to the cause.

    Of course, with Microsoft's nearly endless cash reserves, this is hardly troublesome for them. I think it's rather a move to try to eliminate any and all possible threats to their market by any and all means. Microsoft will never be satisfied until there exists only one corporation.

    Sony is just as evil as Microsoft, only less versatile and less powerful. You can bet they would be employing the exact same tactics if they had the same resources.

    This could be the death of gaming as we understand it. If Sony and Nintendo are washed away, Microsoft could literally name their own price for their products, just like Office, Windows, etc. Most likely they would test the limits of what people would pay. $80 games with $20/month fees anyone? How about $50 controllers. It'd be just as horrible if Sony destroyed both Microsoft and Nintendo.

    Nintendo was downright angelic when their monopoly ruled the earth, in comparison, even in the midst of price fixing, etc. Give me Nintendo and Sega over Microsoft and Sony any day, any time.

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    Quote Originally Posted by Arkaign
    Quote Originally Posted by Mr.FoodMonster
    Alright boys and girls, I dont know how this gets past so many people, but let me refresh your memory.

    Money is NEVER made on consoles. EVERYTHING is the software. Thats where the profits are at. Its worth it to lose X on each console if they make 3 times that on a multimillion selling game. Halo 1 & 2 anyone?
    Gross overgeneralization is not your friend.

    Microsoft is still admitting massive losses on the entire Xbox project, not just on the console.

    I mean, say they sold 50 million copies worldwide, at an average retail price of $50, with the margins bringing Microsoft back a raw $30 on each copy. That adds up to 1.5 billion in income. This certainly does NOT put a substantial dent in the billions lost each of the last 5 years on the Xbox project. R&D, advertising, exhorbitant initial mfg costs, service and support, etc.

    Also, the NES, SNES, Gameboy, Genesis were all highly profitable per unit. The PS1, PS2 became profitable after the component prices fell some. With the increased level of complexity of modern consoles, it's likely that the window of loss/break-even will extend even further. With hard drives, cd/dvd drives, highly specialized video subsystems, etc, prices are undeniably increasing.

    There is a danger (evident in the first Xbox) that you will continue to lose money over the entire feasible lifespan of a console, in terms of unit cost vs. selling price. This is not true for all units.

    I think Microsoft's big chance to make 360 profitable is going to be testing the bounds of how much they can rake in off of Live and online content, in addition to the handful of huge titles (Halo 3) that will contribute to the cause.

    Of course, with Microsoft's nearly endless cash reserves, this is hardly troublesome for them. I think it's rather a move to try to eliminate any and all possible threats to their market by any and all means. Microsoft will never be satisfied until there exists only one corporation.

    Sony is just as evil as Microsoft, only less versatile and less powerful. You can bet they would be employing the exact same tactics if they had the same resources.

    This could be the death of gaming as we understand it. If Sony and Nintendo are washed away, Microsoft could literally name their own price for their products, just like Office, Windows, etc. Most likely they would test the limits of what people would pay. $80 games with $20/month fees anyone? How about $50 controllers. It'd be just as horrible if Sony destroyed both Microsoft and Nintendo.

    Nintendo was downright angelic when their monopoly ruled the earth, in comparison, even in the midst of price fixing, etc. Give me Nintendo and Sega over Microsoft and Sony any day, any time.
    I agree I mean I would rather have sony over microsoft any day but tehy are both evil in there own rights

    but to say nintendo was downright angelic lol

    I disagree i think nintendo in a sense is just as bad as both sony and microsoft but no corporation is perfect none will ever be.


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    Cherry (Level 1)
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    well, I said they were angelic in comparison to Microsoft, not angelic in and of themselves

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    Just to clarify, I wasn't stating that MS was losing money on consoles, I was just posting that someone claimed to have an exact AMOUNT per console stated as to how MUCH they lost. And yes, I'm sure it's a fairly rough, but well edjucated guess based on hardware and mfg. costs.
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    Microsofts goal it to continue to rule the home computer market. When Sony come out with the PS2 and said it was the computer for the family TV they started a war. Bill Gates does not like to lose and he is going after Sony.

    It you want to learn more about Bill Gates and what makes him tick read "Hard Drive" great book. My money is on Microsoft in this war, but we shall see.

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    Quote Originally Posted by Arkaign
    How about $50 controllers.
    They ARE charging $50 for controllers.

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    Quote Originally Posted by Arkaign
    Gross overgeneralization is not your friend.

    Microsoft is still admitting massive losses on the entire Xbox project, not just on the console.

    I mean, say they sold 50 million copies worldwide, at an average retail price of $50, with the margins bringing Microsoft back a raw $30 on each copy. That adds up to 1.5 billion in income. This certainly does NOT put a substantial dent in the billions lost each of the last 5 years on the Xbox project. R&D, advertising, exhorbitant initial mfg costs, service and support, etc.

    + Massive rant.
    Sony might get bumped out this gen, but they really aren't doing that bad, while Nintendo is still making a profit as per always and they are not going anywhere while all of us are loyal to them. Sony and Nintendo are not getting "washed away" anytime soon.

    Personally, I think the gaming craze is going to die down a bit. I may have bought into the Nintendo hype, but I do agree that gaming needs a shot in the arm. Its nowheres near dying out, but I think a good amount of people will stop gaming this gen.

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    Quote Originally Posted by heyricochet
    + Massive rant.


    Yeah, good points Anyhow, I've divided my gaming almost completely to PC for new/FPS, and classic consoles for other stuff. I have basically already given up on modern console gaming. Insanely expensive games / accessories, online fees, charge you up the butt for extras, etc.

    I might get a PS3, but I doubt I would EVER buy a game for it. Linux+HD MMedia playback would be it.

    It will be a cold day in hell with George Bush singing a duet with Marilyn Manson before I own a 360.

    Rev could be interesting, but details are too sketchy for me to know for sure. Nintendo is clever.

    Next likely gaming-centric purchase will probably be one of those $100 DS dealies.

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    Why can't they make a $127 console and give them away for free? Best business plan ever. *shrug*

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    He should sell them on eBay, he would make a fortune.

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    Quote Originally Posted by Arkaign

    Yeah, good points Anyhow, I've divided my gaming almost completely to PC for new/FPS, and classic consoles for other stuff. I have basically already given up on modern console gaming. Insanely expensive games / accessories, online fees, charge you up the butt for extras, etc.
    I really don't know how you can make that argument that current console gaming is too expensive when you say that you play new FPS games on PC. The hardware requirements every year or two for a decent PC gaming experience are FAR more expensive for PC gaming than any glut microtransactions could ever be.

    As for insanely expensive games, Doom 3 anyone?

    I mean, it's certainly your right to abandon console gaming for whatever reasons, but it will ALWAYS be cheaper than PC gaming. That will never change.

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    Quote Originally Posted by hezeuschrist
    I really don't know how you can make that argument that current console gaming is too expensive when you say that you play new FPS games on PC. The hardware requirements every year or two for a decent PC gaming experience are FAR more expensive for PC gaming than any glut microtransactions could ever be.

    As for insanely expensive games, Doom 3 anyone?

    I mean, it's certainly your right to abandon console gaming for whatever reasons, but it will ALWAYS be cheaper than PC gaming. That will never change.
    Actually, this really isn't overly a valid arguement anymore. You can get a 2.4ghz cpu for around $100 now. Hard drives haven't made any real useable size or speed advancements in probably 10 years (anything over 10GB is plenty to play games with). You can get a 256mb video card for $50-$75. Sound card can easily be $0-$25, and 1GB of ram can be under $100 easily. Mobo to hold it all - $50.

    All in all, Using components more than 5 years old from your last PC, and a few new upgrades, you could build a gaming pc for less than a new console no problem. And speeds aren't really expected to go up on ANYTHING ANY time soon really. What I listed above is virtually a new PC for around $300-$400 max. If you throw rebates and deals and other crap into that.....
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