What many of you might not know is that in the game industry all console manufacturers take a hit on the hardware profits for their systems because they can make it up in licensing fees. With that in mind it comes as no surprise that Microsoft is going to take a $75 hit that GamesIndustry reports.
I do believe this is less than what they were losing on the intial Xbox so it’s really no big deal. And before any of the Sony fanboys start laughing, Sony would be doing much worse reportedly if they tried to compete at the $299 price point that Microsoft is launching at.
The $75 subsidy reportedly required to hit the launch price is quite high, but not unusual for a new console. Platform holders routinely subsidise their consoles at launch in order to build an installed base, and then make back the money from software sales and the rapidly falling price of hardware manufacture late in the lifespan of the console.
However, Microsoft found it more difficult to do this with the original Xbox, since it had to continue buying components from partners such as NVIDIA and Intel at high prices – unlike Sony, which has been able to hugely reduce the manufacturing cost of the PS2 as it builds most of the core components itself.
“all console manufacturers take a hit on the hardware profits”
Wrong-o.
Nintendo takes a bit of pride in being able to make a profit out of their console sales. Sony and Microsoft, though, are used to taking large hits. :)
…Sorry, I don’t have a source to back this up, but I’m about 90% certain I’m right.
Quite ironic if thats true about Nintendo, as out of the current contenders they are the only ones who don’t especially have to deal with piracy.
Comparitively the psx/ps2 and xbox have had a lot of piracy and it has been much easier to do so on these consoles than it ever has been on a Nintendo.
I would have thought that if any company could afford to subsidise on the console costs Nintendo would be the one to do it.
Perhaps its a side effect of trying to make things simple/cheap for developers, or perhaps its greed?
Wait, how many times faster is the PS3 going to be than the Xbox 360?
Man this is going to be sweet.
Wasn’t it a few months ago that Microsoft that their console sales were finally giving them proffit?
I dont know what microhard ass was thinking sending out a product that is so messed up. Must be nice to loose money but not care.