Xbox 360 costs Microsoft $715/ea to produce

[Rainmaykr]

Blurb found here.

 

Ouch, I had no idea that was the type of hit MS was willing to take per unit. Considering what surely must be under the PS3's hood, I imagine it will cost that much more to manufacture.

 

The $499 estimated street price for the PS3 look like a bargain!

[Romier S]

..and that figure has been downgraded to around the 525 mark in subsequent reports. I don't believe that 715 per console price for a second.

 

TeamXbox report on the price of the 360

 

Factoring in costs for the hard disk, the DVD drive, enclosures, the Radio Frequency (RF) receiver board, power supply, wireless controller, cables, literature, and packaging -- the total BOM cost for the Xbox 360 Premium reaches $525, well above the retail price of $399.

[Whooter]

I find the $525 figure far more believable than the $715 one...

[Rainmaykr]

So do I. Though one source, Business Week, is rather reputable. I don't know much about iSuppli or their methods of guesstimation.

 

Not that I care either way, $399 is a steal and the consumer wins in the end.

[Rob B]

hmmm maybe this way they had to sepprate systems the core and premium? accesories are always at a higher mark up aren't they?

[Ricky G]

$399 is a steal and the consumer wins in the end

 

Agreed. This machine is a great value.

 

1- Plays games.

2- Is a cool media center.

3- Xbox live.

4- Marketplace.

5- Achievements.

6- Etc....

 

I would have paid $500, but dont tell MS.

[Carlucci]

If you factor in the R&D costs to produce the system, test it, advertise it, and maintain the Xbox live infrastructure (and you should), the cost per unit would be much higher.

 

Just considering the cost of the system's components doesn't really fit in with real world business. It's like saying a game maker should only charge for the cost of DVD itself -- a few cents -- without considering the immense costs that went into the game's production.

 

 

All these costs are something that any normal company would have to recover through sales, but since we are talking about Microsoft, they are propping up the losses with their gigantic cash largesse. I wonder if MS's video game business will ever get out of the red.

 

Carlos.

[Rainmaykr]

If you factor in the R&D costs to produce the system' date=' test it, advertise it, and maintain the Xbox live infrastructure (and you should), the cost per unit would be much higher.

 

Just considering the cost of the system's components doesn't really fit in with real world business. It's like saying a game maker should only charge for the cost of DVD itself -- a few cents -- without considering the immense costs that went into the game's production.

[/quote']

Which is apparently what iSuppli did, but I don't think they are claiming that the value they estimated is the cost to manufacture, just the "BOM" or Bill of Materials. When you consider everything else that goes into putting all those parts together, you begin to appreciate the value of the 360.

 

Now, if only the jokers making my TV thought along the same lines.

[Romier S]

All these costs are something that any normal company would have to recover through sales

Microsoft is no different in this regard. Being the loss leader is not an option for them this generation, and the 360 has been designed specifically to offset those costs you mentioned. We're speaking strictly in terms of BOM/manufacturing cost as it has traditionally been the barometer in determining loss per console as far as I'm aware of. That $715 figure is astronomical in that regard, and I highly doubt Microsoft would place themselves in a position to lose almost 300 dollars per console on the BOM/manufacturing side. It would place them in a worse position than they were in with the Xbox, and I highly doubt MS has learned nothing in the last four years on how to produce a console. The higher price of accessories, the Xbox Live Marketplace (i.e. microtransactions), and the dual SKU plan is definitely part of the process in recovering the hardware losses they are incurring (including game sales of course;) ).