News Microsoft earning a profit on every console?

yes - it's pretty much common knowledge these days.

 

I'd just like to point out that the line 'and to a lesser extent Nintendo' is completely false.

As I understand it Nintendo have NEVER sold a console at a loss. It's quite surprising how many people are unaware of this...

 

not many actually

 

I'd take this with a grain of salt. Wasn't it not long ago that it was reported that it was actually costing Microsoft more money now to manufacture each 360 then it did in the initial batch?

:EDIT: Can't seem to find the article I read. I'm pretty sure I didn't dream it up though.

 

What was meant is that Nintendo isn't looking to make money out of the console itself, or at least the primary way of games console making money is through the royalties and games themselves.

 

I remember reading in quite a few places that Microsoft were actually cutting their costs by $xx every 6months on the 360 and planning to for a while...

<A88>

 

When did the 360 gets it's first price drop? As far as I have seen it's still priced at $400/$300 except with some retailers doing "Save x% off!" sales.

Like I've said many times before though, we won't see a drop in price for the 360 for quite some time. Microsoft has no reason at all to need to drop the price of the console and the goal for them is for the console to break even before the end of it's lifetime. With the year's lead and the high price point of the PS3, I doubt will see a drop in retail price until Sony brings the price of the PS3 more in line iwth the current price of the 360. We might see a bundle with the HD-DVD some time next year though.

That was/is Microsoft's goal. It was actually quite a shock when I had read that manufacturing prices had actually risen. I just wish I remembered where the hell I read that at though.

 

I've read rumours that the 20gb PS3 almost doesn't exist (ie a store that gets 30 60gb may only get 1 20gb so they can say they had them) If they lose $241 on a 60gb and $306 on a 20gb, I can see why they wouldn't want to sell 20gb models (but still have it around so they can claim they have that lower price point..)

Thats got to be quite a few games to break even mind.

I can understand the idea of selling the console at a bit of a loss to attract buyers who will then buy games .. but I can't help but think sony has taken it a bit too far this time.

 

I agree they don't' have to, but it would be a killer blow. Sony can't sink deeper, the availability will improve and the software problems will be eased with updates...in 6 months, assuming Sony has resolved most issues with the PS3, they will have a equivalent Console + BD player for 100€ more than X360...that, coupled with Sony's following (which is huge in Europe) and more and better games could make the PS3 sales soar.

We all know that the most amount of console sales comes once they are in the 200€ or less range...if MS closes the gap to that range and increases their number of items sold advantage, they could already be the default winner by this time next year.

 

Yeah.

If Microsoft dropped the core to £150 and the premium to somewhere between £200 and £230 at the end of this month, the Xbox 360 would be a huge seller this Christmas.

I imagine however Microsoft may well hold out until Halo 3 arrives before they think about reducing the price of the console. I guess they will see how well the PS3 sales perform.

 

You gotta remember that sony has also had to pay alot of money for R&D of BR, when you pay £1000 for a BR player, it's not because its worth it, but because its the price you pay of being an early adopter of new technology. When you buy new technology, you're not only paying for the normal stuff, cost to manufacture, profit for the manufacturer, profit for the shops and profit for all the middle-men, you have to take a chunk of the R&D costs too. As more and more people buy it, the price drops because theres less of the R&D overhead for the company, meaning more people buy it, more R&D paid for, more price cuts, untill finally the R&D is paid off, the company can start making profit on the technology (it can take many years to actually start profiting off a new technology, making things like this a very risky business). This means your back to paying for manufacturing + profits, the price of the manufacturing will most likely have gone down in this period too, since they discover cheaper and more efficient ways of producing stuff (one of the reasons why HD-DVD is cheaper than BR, it's built on existing DVD technology instead of something completely new).

Although console manufacturers don't intend to make a profit on the console itself usually, so the cost of them is significantly less than a BR player for instance. By selling it cheaper for a loss, you get lots of sales, each one of those sales goes out and buys a few games, over the years they've probably bought alot of 'em, they'll also buy some overpriced peripherals, turning that initial loss into a big profit.

I don't think MS will be giving us a price drop for a bit longer, they've already given us deals that can save us around £50-£80 anyway, I know alot of 360s got sold since that PGR3 deal showed up, me included. I was also one of the ones who bought the xbox + JSRF + Sega GT deal many christmases ago.

 

Good point.

The cost of hardware is not strictly related to the actual cost of it's parts, Research and Development as you say can cost an unbelievable amount of money.

 

Which is, unfortunately for Sony, totally missed (and if I dare, irrelevant) by the consumer. If I spend 1000€ on whatever, I want to feel like I've gotten back 1000€ of whatever-type of enjoyment...not 500€ of enjoyment and 500€ of subsidized R&D costs...

Btw, I'm dying to get an X360, but so far, the only killer-app it has is Gears of War...and I still lack a HDTV. Now, were it to fall 100€, bundle with the HD-DVD drive, or include a 100Gb HDD, I think I'd get it right now, even if it's to connect it to my Dell monitor or SDTV.

 

Gears of War isn't the only great title on the 360, it's got quite a few excellent games out right now, you don't NEED a HDTV for the 360 either, the graphics are still amazing, it's just they're not as crisp. What I've done is I've hooked it up to my second monitor using the VGA cable so it's now running at 1280x1024 res which looks very nice, not as good as a HDTV (since there are sometimes some aspect ration issues with a few games)

But thats the thing, you don't think it's worth the 1k (and neither do I), but there are alot of die hard tech heads or home cinema nuts who would pay anything for the latest and greatest technology. The 1k BR players arn't aimed at the average person or family with 2 kids and a mortgage, initial sales of these things are always alot lower, the people who really want the new stuff pay the premium to pay off the R&D. As the price gradually goes down, more and more people are willing to buy it.

 

I've read mixed reviews about the X360 and a HD telly...some people say it's not a must, but several others don't think it's worth the money if you already have a PS2 like I do. And some games (Dead Rising? Tomb Rider?) aren't really playable on SDTV, I've read...

Still, I'm sure GoW isn't the only AAA game, but the rest of the catalogue, so far, doesn't excite me much. GRAW, I've tried on PC and didn't really liked...CoD2 I finished on PC time ago, and Pro Evolution Soccer is actually worse in X360 than PS2. Now, when Assassin's Creed, Mass Effect, Alan Wake and Bioshock 2 launch... that it's going to be another tale

 

I haven't seen any price drops here in Canada since just after the launch. Most retailers are offering the same games bundled with the Core and Premium verisions...

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