Xbox 360 costs $715 to make?

Wednesday, Dec. 28 2005 | Author: AlexTan

While I do believe this is pretty far-fetched, Insider Scoop is claiming that Microsoft puts up $715 to manufacture every XBox 360 console, meaning they lose $315 – $415 excluding shipping costs. That would mean that they would have to sell 6 – 8 Microsoft games before they broke even, or have 6-8 years of Xbox Live subscription. BusinessWeek estimates that Microsoft is losing $126 per console.

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5 Responses for "Xbox 360 costs $715 to make?"

James AkaXakA

December 28th, 2005 at 16:52
1

Certainly not – they get a huge amount of bulk discount. Not only that, all those bundled in games have a huge margin. Why else do you think they made those early adopters buy bundles?
James Mitchell

December 28th, 2005 at 20:41
2

That is absurd…. no company in their right mind would lose over 100% retail price. Even if they can make that up in selling games. I seriously doubt it. Microsoft must be leaking ‘bogus’ information to boost sales. :-D
cliche

December 28th, 2005 at 21:12
3

This FG entry is misleading. From TFA:
“numbers by Business Week may have reported that Microsoft is losing $126

The $300 loss that this entry refers to is by Insider Scoop who’re not quite as credible as Business Week.

Besides which, this is a war for marketshare: What’s another couple billion for MS?
AlexTan

December 28th, 2005 at 22:02
4

cliche, thanks just fixed that mistake. and as for your comment regarding market share, it’s not about that. the real question here is how is m$ going to make it’s money? market share is a bragging right but shareholders need to know how they are making money.
Chad

January 3rd, 2006 at 14:49
5

While I can’t confirm these figures, all consoles loose money hand over fist at first. The cost to manufacture the units will go down over time and will make up for the loss on the front end…