News Microsoft earning a profit on every console?

http://www.bit-tech.net/news/2006/11/21/Microsoft_earning_a_profit_xbox/

 

I'm really surprised the Xbox 360 has already started to make profit on the actual hardware so soon into it's life cycle, the original Xbox took around four years to break even.

And the big difference is that if the situation was reversed, and it was Microsoft who were loosing $300 per unit they could afford to.

Sony on the other hand have nowhere near as much financial clout, and to be loosing this amount of money on each unit is a serious amount of $, particularly when you multiply it by the number of consoles they plan to sell in the initial launch window:

$300 x 6,000,000 units = $1.8 Billion!

And even after 18 months, unlike the Xbox 360 the hardware parts for the PS3 are going to remain relatively expensive (specifically the cpu) to produce even at high volumes.

 

I'd rather see a price drop for the games and accessories than the console itself, seeing as I already have a 360. When I got it I would've been very happy to pay £400 for it but only have to pay £30 for the games.

Witht the price of the 360 so much less than the PS3, why would they need to drop it's price anyway?

 

That isn't an entirely fair comparison, sure it's now->now but wouldn't it be fairer comparing to MS's initial costs, since they must have been losing some money over the last year. And, inevitably, Sony's costs will go down, whether by enough to actually make money, we shall see.

 

The point is that, at this moment in time, the PS3 is losing a lot of money while the Xbox 360 looks set to be profitable. Things will undoubtedly change in the future, but the fact of the matter is that Microsoft got Xbox 360 on the market 12 months before Sony.

 

I don't think they have to, but I guess the argument from the Sony camp would be that to purchase an Xbox 360 + HD-DVD drive is more expensive than a PS3. However as the HD-DVD add-on is optional I don't think this holds any water.

I agree about the price reduction on games, however I think it will be really hard to persuade developers, retailers and manufacturers to take a smaller cut, unless of course you mean Microsoft could cover that with the profit from the hardware?

 

But I strongly doubt that is anywhere near 10% left for profit, a lot of costs have to goto the dev costs.

 

In adition i would like to know how much money MS/Sony makes with sold games? Maybe Sony makes much more profit on every game sold so the loss on the console is not that big of a bugger.

 

On the contrary, the cost of Blu-Ray media at the minute is just under $20 for a blank single layer disc, so Sony at best would be breaking even for third party games. I believe the majority of 1st party games will be $10 more so that may be the reason why?

 

Yeah MS just reduces the amount they get from licensing, since they're now not losing money on each console, they don't have to make rediculous money from each game to make back losses anymore. Having cheaper games is also a major +point for people looking to buy a console. If they walk into a game shop, and see the PS3 section and the 360 section, if they see that not only the 360 is alot cheaper, the exact same game on the 360 is also cheaper, it's more likely they're gonna go for the 360. Doesn't take into account exclusives and fanboyism though.

 

I agree, but then are developers going to be happy about the Xbox 360 mutli-platform games being £10 cheaper than their PS3 counterpart? I think most consumers looking at the price difference would blame the developers and perhaps might shun all of their games as they think they are being ripped off?

 

look at the price of that optical drive..... is there any way to mod a new HD into the XBOX360? i am seriously thinking of getting a 360 and a wii.

 

The simplest thing to do is attach a usb hardisk.

 

and it has all the functions of the standard hard drive that you attach to the top of the unit?

 

So you belive everything you hear? I never much doubt sony are paying 20$ for a single layer blu ray disk, probably more like 2$, maximum

A Blu ray drive costs 125$, or .. 70 quid, so much for bluray being the reason the PS3 & associated DVD players costs 'so much more' than everything else - they must be raking it in with the hype not the technology, even with the other bits and a 70 quid drive, how can they justify a BR player that costs 1000 notes? because stupid people will pay it, not because its worth it, the prices will drop soon and thats not because of drops in the tech prices like they tell you its because theyve run out of stupid people with 1000 quid spare and are now moving into their next pricing bracket

 

Sorry I should have clarified that, you cannot save or download to an external drive, yet...

 

The cost of a blank single sided Blu-Ray disc to you or I would be on average $20. I agree that although Sony at worst may only be paying $5, it is a lot more money than the media used by the Xbox 360.

 

hmmm i wonder what is inside the 360 hard drive gray peace.

 

Depends how you define 'a lot more money'

Arguably they will get it a lot cheaper, the 20$ you pay is a stupidly ridiculously overpriced price aimed at the top end of people with disposible income.

Sony however, not only get them at cost, not retail price, they also get ridiculous economies of scale, when buying 1,000,000 disks, theres gonna wrangle a big discount or just go elsewhere, the price they pay won't even be comparable to what we will pay currently in the shops.

DVDs cost companies pennies to produce (DVD-rs can be had for 10p to me, so probably 2-3p in bulk to publisihng companies) so it wouldnt suprise me if blueray disks were available to sony for less than a quid a piece - altho this is 25x the price and does seem to a bomb more than the normal dvd games - it is still only 2% (of a 49.99 game) of the total price your paying for the media, leaving a massive 98% oging towards the actual game - id say even tho blu ray might cost more, its marginally more, and seing as your paying upwards of 400 quid on a console, 50p-quid extra a disk which already has increased selling value due to the hype of how good the disks already will pay for itself - and no way justifys the extra 10-20$ sony are slamming on top, even at the same price from the increased sales from the 'wowww oomggg blu RayzzZZ' geek parade they will probably more or less cancel out the 2% they lose on a game in manufacturing to a couple of extra sales

 

Sorry to bring this out of left field, but did you guys read that the Wii is making a profit from day one?