Microsoft loses $126 per Xbox 360 sold

WxChaser · Nov 24, 2005, 04:07 AM

It's no secret that console manufacturers typically lose money per unit of hardware sold, only to make up the difference in software sales. BusinessWeek has the breakdown on how much it costs for Microsoft to make an Xbox 360—and the numbers aren't pretty.
When you toss in all the peripherals, the Xbox 360 costs roughly $525 to manufacture, meaning Microsoft loses a whopping $126 per console. The original Xbox, for comparison, lost $24 per console sold. The gap between manufacturing cost and retail price will diminish as fabrication costs drop and economies of scale kick in, but that still leaves the Xbox 360 with a much larger gap than its predecessor possessed. This gap, in turn, could lead to more pressure on game developers to finish products faster and market them more aggressively.

Read More / Source: The Tech Report

Iria · Nov 25, 2005, 03:03 PM

Quote:

Originally Posted by WxChaser

It's no secret that console manufacturers typically lose money per unit of hardware sold, only to make up the difference in software sales. BusinessWeek has the breakdown on how much it costs for Microsoft to make an Xbox 360—and the numbers aren't pretty.
When you toss in all the peripherals, the Xbox 360 costs roughly $525 to manufacture, meaning Microsoft loses a whopping $126 per console. The original Xbox, for comparison, lost $24 per console sold. The gap between manufacturing cost and retail price will diminish as fabrication costs drop and economies of scale kick in, but that still leaves the Xbox 360 with a much larger gap than its predecessor possessed. This gap, in turn, could lead to more pressure on game developers to finish products faster and market them more aggressively.

Read More / Source: The Tech Report

iSuppli has diff numbers ... 153 loss for the 360, and 125 for the original.

Vikingod · Nov 25, 2005, 03:11 PM

Sort of gives you an idea of just how lucritive the business is. If they can lose money like that, and still turn an unbelievable profit, things are going pretty well.

Falstaff · Nov 25, 2005, 03:23 PM

I have an opinion that Microsoft will work out all the bugs in the new 360 just like they do with all their software...
we are all beta testers...LOL

Nov 24, 2005, 04:07 AM	#1
WxChaser Super Moderator Join Date: Oct 2002 Posts: 404 Rep Power: 0	Microsoft loses $126 per Xbox 360 sold It's no secret that console manufacturers typically lose money per unit of hardware sold, only to make up the difference in software sales. BusinessWeek has the breakdown on how much it costs for Microsoft to make an Xbox 360—and the numbers aren't pretty. When you toss in all the peripherals, the Xbox 360 costs roughly $525 to manufacture, meaning Microsoft loses a whopping $126 per console. The original Xbox, for comparison, lost $24 per console sold. The gap between manufacturing cost and retail price will diminish as fabrication costs drop and economies of scale kick in, but that still leaves the Xbox 360 with a much larger gap than its predecessor possessed. This gap, in turn, could lead to more pressure on game developers to finish products faster and market them more aggressively. Read More / Source: The Tech Report

Nov 25, 2005, 03:23 PM	#4
Falstaff Old Codger Join Date: Sep 2002 Location: USAFA Posts: 19,048 Rep Power: 207	I have an opinion that Microsoft will work out all the bugs in the new 360 just like they do with all their software... we are all beta testers...LOL __________________ "Inspiration is always a surprising visitor."

Nov 25, 2005, 03:11 PM	#3
Vikingod Int'l Fish Liaison Join Date: Jul 2004 Location: By the light of lamp I sit and type... Posts: 16,197 Rep Power: 112 System Specs	Sort of gives you an idea of just how lucritive the business is. If they can lose money like that, and still turn an unbelievable profit, things are going pretty well.