OLU1701 said:
Originally it was estimated that with Xbox 360, Microsoft lost $176 per unit although with the price of components falling in price due to an increase in supply and the steady demand from the 360, this loss has now fallen to a more tolerable $31. It is estimated that by the end of the fiscal year, Microsoft will be in profit of around $36 per unit.
As of right now, MS make money on every 360 unit..
Business 2.0 said:Sony (SNE) will lose $241.35 on every PlayStation 3 game console it sells at $599, and $306.85 on every console it sells with a smaller hard drive at $499, according to an analysis of the component costs conducted by iSuppli, a research firm.
That's a staggering figure that is sure to influence how this round of the console war plays out. (In perspective, Sony will take a loss equal to the retail price of a Nintendo Wii every time it sells a PS3.)
It's not unusual for console makers to lose money on the game console itself, expecting to make up for that by selling multiple games later. Sony and Microsoft (MSFT) both have employed that strategy in the past to get more powerful consoles into the hands of gamers.
But this time around, Microsoft will make $75.70 on every Xbox 360 it sells, not counting marketing and distribution costs. So while Microsoft won't need to sell a set number of games to cover its build costs, Sony will have to sell five to seven. That is a high hurdle. This is corrected from an earlier version that said Microsoft will lose $75.70 on each Xbox 360. Thanks, Mike, for the catch.
(iSuppli analysts found a Seagate hard drive in the PS3, as we noted here that they would.)
So if we take into account marketing and distribution, it'd be totally fair (and really quite conservative) to say that MS makes $30/40 on every Xbox 360. This will increase when they start manufacturing the improved 360's in January, with the 60nm CPUs (they're cheaper to make, as well as being better).
This give MS alot of scope for price cuts. I think they're probably waiting to see how the Wii and PS3 do in more than one region. But, we should all know by now, MS are not afraid to take losses on consoles. I give it until the European launch of the PS3, I think that's when the 360 price will be slashed. Europe is one of the Xbox's most valuable markets.
( Edited on 17.11.2006 13:37 by Oni )