Xbox360 Costs $715 to Make

[Oddmaker]

Joystiq (http://www.joystiq.com/) is reporting (http://www.joystiq.com/2005/12/28/xbox-360-costs-715-to-make/) that the XBOX360 is costing Microsoft as little as $715 to make.

Earlier numbers by Business Week may have reported that Microsoft is losing $126 on every Xbox 360 sold. That figure is now believed to be a bit higher by some. According to Insider Scoop, the world's largest software maker is losing upwards of $300 per console sold. From the article: "A high ranking friend at IBM, one that worked on the Xbox 360 chip design, tipped us regarding the real expenses involved in manufacturing the Xbox 360... 'It costs Microsoft approximately $715 to make, the manufacturing costs are still too high, another reason why they’re producing relatively small quantities.'”

[Doctor Setebos]

If true, it certainly puts a monkeywrench in their plans to make the Xbox division profitable by July 2006 (http://www.directionsonmicrosoft.com/2006top10.html).

[XenonCJ]

Yes, but how much do they profit on controllers, games and other 360 related wares sold? I suspect they will do quite nicely...

[netcraazzy]

This is more speculation and rumors, I'd take it with a very large grain of salt.

[Citizen Philip]

Captain Microsoft and its sidekick Grossly Large Bank Account will be largely left impervious to the cost of using their Xbox superpowers in their skyscrapper dueling match with Lord Sony and its DRM guardians.

[Morrolan]

I figure they're going to fill the initial demand, then immediately switch to a new manufacturing process. I'm willing to bet that they already know of ways to fabricate this thing for cheaper, but they're not willing to eat the lull in supply that switching processes will cost them, right now. In the four year run, having as many consoles as possible sold when the PS3 hits is far more important than a lump sum lost today.

[Reanimated]

Sounds like complete bullshit to me. If 360 costs that much, I guess PS3 will cost 900 dollars to build.

I've seen other estimates from more reputable sources that put them at pretty close to break even on the hardware.

Anyway, these "omg t3h *insert console here* costs 80 batrillion dawlers to maik" threads are getting old.

[KNOTE]

This is entirely incorrect. But it's a fun what-if scenario.

[Heretic Machine]

Heard another rumor that said Microsoft was making $100 on every console sold. These rumors mean NOTHING.

[Blade]

Jesus Christ.

No, I'd seriously consider it a possibility that it really costs upwards of $500.

Tri-core 3.2GHz processor? Awesome video capabilities in HD? HDD? At best they're breaking even, but it's realistic to say that they're losing money.

[Evil_SPanKY]

I call sheninagans on this article! $715 my hairy ass...

[Rommel]

While obviously this is less disasterous for MS than another company without their insane assests, I find it hard to believe the manufactoring cost be quite this high. Of course no company will ever release such numbers, but I often wish they would.

[superherotaco]

I call sheninagans on this article! $715 my hairy ass...

It's a guy from IBM's friend. He TOLD him that. What more do you need you PS3 Fan boy!!

[drakkarim]

Jesus Christ.

No, I'd seriously consider it a possibility that it really costs upwards of $500.

Tri-core 3.2GHz processor? Awesome video capabilities in HD? HDD? At best they're breaking even, but it's realistic to say that they're losing money.

one has to take into account that this 'tri-core' processor is not built from the ground up, IBM reuses a lot of their technologies/architectures for the various companies it services, in fact, they're a little on the lazy side in terms of engineering NEW things, they like to reuse as much as possible while still charging premium prices. so while they DID have to put the tri-core together from a few different core designs, they didn't exactly design the tri-core from the ground up (repeating myself) anyway, point is, if IBM is reporting the news of a 'price' its because they want it to appear that they're giving microsoft special 'deals' cuz they're charging them so 'little' for their processors and all their managers/vp's will be starving this christmas as a result of these discounts they give to IBM.

personally, IBM is equivalent to NASA and Unions, great in their time, but bloated whores of a business model these days, trying to justify their existance.

[Taco]

Indeed, you could almost get a full blown PC for that. I'm not buying it(this story that is ;)).

[phantomhitman]

well it cost me $650 so far for the system, games, controllers, dongle switches, and woobulation convertor

[Evil_SPanKY]

well it cost me $650 so far for the system, games, controllers, dongle switches, and woobulation convertor

lol, value chain?!?

[phantomhitman]

You only need the value chain to hook into a microsoft tv, since my tv is sd I can use the convertor.

[SMES]

personally, IBM is equivalent to NASA and Unions, great in their time, but bloated whores of a business model these days, trying to justify their existance.

The main reason that some unions are bloated is because anti-union laws have made it incredibly difficult for new unions to form, leaving large sectors of the workforce stuck in non union minimum wage jobs. (e.g. walmart)

The big unions that do exist, also, are mostly the leftovers of heavy handed red scare, anti-communist attacks that crippled and reorganized the major unions into corporate-friendly concession machines.

This has been getting better since the early 90's, though, as new blood and reorganized union philosophies bring better understanding of economics. Far from perfect, but getting better in some places.

NASA on the other hand is still a rather costly research organization, but they don't hemmorage cash like the defence industry does so it's hard to single them out.

[SMES]

woobulation

I love that word. It's great when new things invented are given Dr. Seus-sounding words for names.

Also I googled wobulation to see what it was, and I have a question: does it actually work as well as it says? Which brand is good and how much does it cost?

edit: Nevermind, did more research and it only works for projectors I see. Still, a cool word :)

[phantomhitman]

I love Also I googled wobulation to see what it was, and I have a question: does it actually work as well as it says? Which brand is good and how much does it cost?

edit: Nevermind, did more research and it only works for projectors I see. Still, a cool word :)

holy shit that is a real word?! I had no idea. I have to go look that up now.

[doyama]

It doesn't really matter how much *** loses on each Xbox360. It's irrelevant because Office and WinXP subsidise its existence. The gaming division has never made money ever, except for one quarter when Halo2 came out, and even then they were all like 'oh this is a blip we are not going to be profitable don't get too excited that this will continue' to investors. The gaming divisin has lost 1-2 billion dollars over the lifetime of the xbox if you track the annual reports.

The Xbox is really to appease investors that MS is 'expanding' into new markets. It was never intended to make money, only to be a gigantic PR machine.

[mister_slim]

I could see them losing a little bit of money, but there's no way it's that much. From Robbie Bach's canary-eating tone in interviews I wouldn't be surprised if they are making a bit of money.

[Evil_SPanKY]

You only need the value chain to hook into a microsoft tv, since my tv is sd I can use the convertor.

Ahh, thanks phantom, I always get that confused... :D

[Twigz'N'Berries]

Wow,

Does EA approve of the advertising on here now, or is it just the cost of doing business and being profitable? The ad to the left asks if I like 'horny bunnies'...its a link to some anime J-list stuff.

[XenonCJ]

Wow,

Does EA approve of the advertising on here now, or is it just the cost of doing business and being profitable? The ad to the left asks if I like 'horny bunnies'...its a link to some anime J-list stuff.Says the guy who's name is a metaphor for "cocks and balls"....

[phantomhitman]

Says the guy who's name is a metaphor for "cocks and balls"....

s3rv3d!!11

[Predation]

The big picture is completely being missed here, and that is:

Microsoft is making products to make money

that might sound like a blinding flash of the obvious (thankyou scott adams for that line), but nevertheless people are going "omgzorz" at the price of the xbox. However Microsoft clearly plans to make up that money in games, xbox live, prepherials, and all the other crap that people have to buy to get the full experience. for all we know they might hype up the HD experience and then "suprisingly" release a reasonably-priced HDTV. For all we know maybe they are purposely insinuating that they are losing money to make consumers think they are getting the better deal out of the xbox and buy more.

Anyway it sounds like that is pure speculation on the price. the main reason its nothing but speculation is because the numbers are obviously based on the retail price of the various hardware assuming it was being sold for a PC. The actual costs of making it are probably locked up tighter then Sony's ps3 release date. Bottom line is, no matter how much guessing they do, its all speculation.

[if76]

let's say Sony loses $300 on every PS3. If Microsoft bought up a bunch of PS3's and threw them in the trash, this would cost Sony dearly in that they'd lose money on the hardware and on marketing and publishing 1st party titles which no one would be able to play. Then because no one is buying the games, publishers would lose confidence in the playstation and maybe cut them off like many did for the gamecube. Is it worth it?

[puar]

i think the xbox 360 is makeing no profit if that what this post is about but its funny xbox made a cool system but they made no profit how sad :eek: :(