Is it true microsoft makes a loss??

sinjin_smythe

I heard somewhere that microsoft are making a price loss on the console itself , that the componants are worth alot more. But that they hope to make huge profits on selling the games ??

Creamy Goodness

yes, generally that rule applies to every console.

peterk19

weedhead wrote:

I heard somewhere that microsoft are making a price loss on the console itself , that the componants are worth alot more. But that they hope to make huge profits on selling the games ??

yea its true think they're losing around $150 per console
Pete

Shrimp

Microsoft dont mind making the loss as long as they get a foot in the market! They will make the return on games etc, and new customers.

sinjin_smythe

well thats nice to know, sounds like a bit of a gamble though but what do i know about marketing

Laguna

They say they're making a loss but I have a hard time believing them to be honest. The quote of $150 lost per console may only apply to the US market not here, as in the EU, we're paying the most for the console in the world, oh and charging €100 for a Xbox 360 20gb HDD when you can buy an 80gb HDD for your PC from komplett for €60, hmm, making a loss on their consoles/hardware?

GrumPy

its a 20gb SATA 2"5 laptop drive, a bit more expensive...... you try buy a pc of same spec as 360 it will cost you a hell of alot more then €410.

peterk19

Laguna wrote:

They say they're making a loss but I have a hard time believing them to be honest. The quote of $150 lost per console may only apply to the US market not here, as in the EU, we're paying the most for the console in the world, oh and charging €100 for a Xbox 360 20gb HDD when you can buy an 80gb HDD for your PC from komplett for €60, hmm, making a loss on their consoles/hardware?

its a 2.5" sata drive and the higher cost in europe is not passed on by Microsoft its passed on by Tax anyway they have to make the money on peripherals and games its how every console company does it from memory no company has makes a prophit on console at the start
Pete

steviec

peterk19 wrote:

its a 2.5" sata drive and the higher cost in europe is not passed on by Microsoft its passed on by Tax anyway they have to make the money on peripherals and games its how every console company does it from memory no company has makes a prophit on console at the start
Pete

As far as I know the Gamecube did. Emmm not sure about any others. Microsoft are definitely making a loss on the core console, not on accessories though. Overall they made a loss on the original xbox, even after games sales, but they maintain that was always part of the plan, to gain recognition for their next console.

Retr0gamer

The Gamecube was sold at a loss originally but the console to game sales ratio is really high for the gamecube, something like 1:6, so Nintendo made a huge profit from the gamecube. The Xbox which sold about as much as the Gamecube worldwide has a console:games sales ratio of about 1:2 so it's not surprising that Microsoft are making a huge loss. The only month Microsofts xbox division made a profit was the month Halo 2 went on sale. I thought it was funny when Microsoft were happy that in that year they 'only' made a loss of 2 billion dollars on the xbox. Still it's a sound tactic. Xbox is now a household name everywhere except in Japan and i predict the xbox will be significantly more profitable. All consoles it seems will have to be sold for a loss initially except the Nintendo Revolution, but nintendo are using the tactic of selling the console on it's cheap and cheerful price and innovation and not on the power of the console.

Stoichkov

Actually the xbox lost over $4bn according to wikinews. I'm almost sure that in the time magazine about the 360 it mentioned a $5bn loss but I can't find the mag so I'm not positive.

Pretty much all consoles start out costing more to make than they retail for but as production becomes more refined and costs decrease a profit can be made like with the GC, ps1 and slimline ps2, this was never the case with the xbox though which was always a loss maker.

The 360 certainly retails for less than it costs but I'd be surprised if MS haven't learned from their mistakes when it comes to cost cutting. In fact I think they've copied the likes of Sony and done more inhouse production rather than more expensive outsourcing.