http://www.gamespot.com/news/6140383.html

Quote :

"BusinessWeek commissions study, which says the software giant is paying a premium on next-gen hardware. When Microsoft got into the console game in 2001, much was made of the fact that it lost an estimated $125 per console on each Xbox. Four years later, that per-console-hit has tallied to $4 billion of red ink for the Redmond, Washington-based software colossus, whose current-fiscal-year forecast calls for $44.5 billion in revenue. However, Microsoft seemed all too happy to fork out billions to become the number-two console maker in the world. The approximate 22 million Xboxes it has sold surpasses Nintendo's to-date sales of over 16 million GameCubes--but still lags far behind the 90-million-plus Sony PlayStation 2s in homes worldwide. Now, it appears that history is repeating itself. According to a study commissioned by BusinessWeek, Microsoft is again losing around $125 per hard-drive-equipped unit of its brand-spanking-new console, the Xbox 360. To perform the study, tech researcher iSuppli took apart an Xbox 360 and examined the cost of all its components. It concluded that the hardware of each unit cost $470 disassembled. That means Microsoft loses $71 before each HDD-equipped 360 console goes to the factory, right around the $76-per-unit loss analysts predicted for the core Xbox 360, which has no hard drive, back in June. (Those same analysts also predicted shortages of the console, which then was believed to come in only one model.) However, when iSuppli said the HDD-equipped 360 console cost $470, that's exactly when they meant--just the console itself. They didn't include the cost of the wireless controller, headset, Ethernet cable, universal media remote, combination high-definition component/standard A/V cable, and bricklike power supply that come in the box of the $399 Xbox 360 "Premium Pack." Factor those in, and Microsoft's per-unit-loss on each Premium pack comes to $126--just above the per-unit loss of the original Xbox--before one penny (or, more likely, yuan) is spent on labor. "

11/27/2005 8:06:55 PM

Holy crap. The rumor was MS was trying to turn a profit this console generation. Fat chance.

11/27/2005 8:12:32 PM

The goal is to buy it and then use it for Linux or video stuff and never buy any games.

[Edited on November 27, 2005 at 8:13 PM. Reason : (ever wonder why MS has been fighting Linux on the XBox? )]

11/27/2005 8:12:36 PM

old

11/27/2005 8:13:59 PM

hey, you only have to buy about 10 games before it's profitable.

11/27/2005 8:42:05 PM

11/27/2005 8:42:33 PM

thats crazy

but predictabale

11/27/2005 8:56:24 PM

im sure they'll eat it until they are the household name for gaming. you gotta assume that the ps3 cant be much more profitable unless they charge an arm and a leg for it (in which case it is likely that xbox might emerge as teh definative #1).

purely anecdotal here, but it seemed like everyone was saying "i gotta go play nintendo" in the 90's. then it was "gotta go play playstation"...and it seemed to be slowly becoming a race between xbox and playstation. this is in the media and whatnot.

11/27/2005 10:22:08 PM

i think the term now is "i gotta go fuck my girlfriend"

11/27/2005 10:55:53 PM

Quote :

"According to a study commissioned by BusinessWeek"

I dunno ... how much knowledge does BW have with regards supply chain/distribution/Walmart-type stuff with respect to electronics? Seems to me if anybody could find and make a deal on bulk hardware, it would be Microsoft.

11/28/2005 12:28:53 AM

^ You question BW, then go on to make a conjecture on what M$ can, and can't do?

Haha

11/28/2005 12:37:21 AM

^^BW is one of the most reputable business sources out there...

add the fact that a TON of the 360's are being returned with the crashing issues which is costing more labor, shipping and time...as well as hurting the image of the 360...they better sell a LOOOOOT of games

11/28/2005 2:01:37 AM

why is this news?
every console has been sold at a loss since forever. software is where the money is made.

11/28/2005 2:23:51 AM

Quote :

"software is where the money is made."

IBM laughed at this notion... gg Gates and Co.

11/28/2005 3:14:16 AM

Quote :

"every console has been sold at a loss since forever."

Please do some research before posting incorrect data.

11/28/2005 3:39:41 AM

Quote :

"Microsoft taking $126 hit per Xbox 360"

there are so many reasons why this probably isnt true

11/28/2005 4:29:06 AM

BW requires a subscription ... Google Cache doesn't ... original article:
64.233.161.104/search?q=cache:8TsiuZ_AbG4J:businessweek.com/technology/
content/nov2005/tc20051122_410710.htm+business+week+xbox&hl=en&client=firefox

Quote :

"Microsoft's Red-Ink Game Redmond will sell every Xbox console at a big loss, says researcher iSuppli. Not to worry, the profit is in the associated software Microsoft's newest gaming console marks an improvement on the earlier version in some decisive ways. To name a few, the pricier Xbox 360 is sleeker and more powerful (see BW Online, 11/22/05, "Xbox: How It's Designed to Thrill"). And unlike its predecessor, the Xbox 360 is being released months ahead of the comparable next-generation console from Microsoft's chief gaming rival, Sony (SNE). But when it comes to profitability, the new machine won't change anything. Microsoft (MSFT) will carry on its tradition of taking a loss on the console, according to a preliminary analysis by market researcher iSuppli. BREAKING IT DOWN. An up-close look at the components and other materials used in the high-end version of the Xbox 360, which contains a hard drive, found that the materials inside the unit cost Microsoft $470 before assembly. The console sells at retail for $399, meaning a loss of $71 per unit -- and that is just the start. Other items packaged with the console -- including the power supply, cables, and controllers -- add another $55 to Microsoft's cost, pushing the loss per unit to $126. These estimates include assumptions that Microsoft is getting a discount on many components. That was the case with the first Xbox console, which contained about $323 worth of parts and materials when released, but sold at retail for $299. It's certainly not going to help Microsoft reverse the trend of losses in its home-entertainment segment. In the fiscal year ended June 30, that unit lost $391 million on sales just shy of $3.25 billion. That's a little more than 8% of Microsoft's total sales of $39.8 billion. A Microsoft spokeswoman said that the company's plan calls for a "gross margin neutral" strategy through 2006, meaning that between the sales of consoles, game software, and accessories, it expects to essentially break even. Profits should follow in 2007. PLAYING TO WIN. Microsoft's strategy with the Xbox family has always been one of taking a loss on the hardware in hopes of cutting a profit on game-software sales. Redmond would like nothing more than to narrow Sony's lead in computer games (see BW, 11/28/05, "Robbie Bach Is Ready to Rumble"). The Xbox 360 was released widely on Nov. 22 with 18 game titles from companies such as Electronic Arts (ERTS), Activision (ATVI) and Microsoft's own game unit. It hit store shelves in the U.S. and Canada at the stroke of midnight, with consumers lining up outside stores from San Mateo, Calif. to New York hours before the official launch. Chairman Bill Gates showed up for a sales event at a Best Buy (BBY) store in Bellevue, Wash., and Microsoft held a launch party that drew hardcore game enthusiasts to California's Mojave Desert (see BW Online, 11/22/05, "Hardcore Offer Mixed Verdict at Zero Hour"). Semiconductors alone account for $340, -- more than 72% of the materials cost -- iSuppli estimates. One key component, the IBM-designed microprocessor chip at the center of the console (see BW Online, 10/25/05, "Inside IBM's Xbox Chip") costs about $106. Both IBM and Chartered Semiconductor (CHRT) of Singapore are building the chip for Microsoft. ROOM FOR IMPROVEMENT. Analyst Chris Crotty with iSuppli says that as both companies improve their manufacturing efficiency and production yields, they will likely reduce the chip's cost by 20% to 25%. The same will likely apply to ATI (ATYT), which is building the graphics-processing unit, or GPU, for the Xbox. iSuppli estimates that the chip is the most expensive component in the system at $141. The graphics chip also includes embedded memory from NEC (NIPNY). "There's room to improve the yields on both chips," says Crotty. "We expect that could cut the materials cost by as much as $50." That would bring the materials cost down to $420 and total expense to $475 -- within $76 of break-even. Costs of other components could come down over time as well, further narrowing Microsoft's loss on the product. Other components in the system include a hard drive from Seagate (STX), which costs $53, and memory chips from Samsung at $65, iSuppli says. EVERYBODY LOSES. IBM also has designed chips at the heart of the competing video-game systems -- the Playstation 3 from Sony and Nintendo's forthcoming Revolution system, both of which are due next year. Crotty expects that Sony's loss on the Playstation 3 may be even wider, as the cell processor that IBM, Toshiba, and Sony designed for the system is more complex. Estimates vary as to how much the cell processor will cost. Richard Doherty of Envisioneering Group in Seaford, N.Y., expects the cell chip to cost about 50% more than the Microsoft chip. "Based on what we've seen so far, the Playstation 3 could cost as much as $600 to make in today's pricing," Doherty says. And Crotty says that since it's a more complex chip, its price will fall more slowly than the price on the Xbox chip. FIRST TO MARKET. "The cell processor is a great chip with a lot of power, but we're hearing that it's a little more difficult to develop games that take advantage of that power," Crotty says, adding that the cell chip and Blu-Ray DVD drive will also add to Sony's materials cost. The Xbox 360 uses a conventional DVD-ROM drive that costs $21. Sony has yet to set final pricing for the Playstation 3 in North America, but the unit is expected to sell first in Japan for the equivalent of about $450. Microsoft beat Sony in timing, but Sony could get at least some of its thunder back by shaving about $51 off that price tag. "

Quote :

"You question BW, then go on to make a conjecture on what M$ can, and can't do? Haha"

Please contribute something useful ... I asked a question and wondered if anybody else had some additional sources to verify this information.

[Edited on November 28, 2005 at 6:41 AM. Reason : silly crazycode]

11/28/2005 6:36:26 AM

I guess they will be taking a greater loss when I buy one for $200 in a few years?

11/28/2005 8:15:23 AM

I'm pretty sure history has shown that Bill Gates knows nothing about making money and that the xbox 360 is just another one of his hairbrained schemes.

11/28/2005 8:40:46 AM

why didn't they just charge the extra $126?

clearly the market has shown it would have still been purchased

i mean, you had 5-6x the people at the intitial offering wanting the product

sure you MIGHT have thinned your customers out, but hell, lack of supply did that for them...

11/28/2005 9:26:04 AM

11/28/2005 10:46:53 AM

hahaah the PS3's "tech demos" that "wowed" people were all FMV's and NOT in game shots at E3.

ffs.

And why the fuck does EVERYONE want this console to fail? You'd think Sony would be higher on the shit list with the latest rounds of their tomfoolery.

[Edited on November 28, 2005 at 10:57 AM. Reason : fuck sony.]

11/28/2005 10:56:49 AM

hahahaha

that's really funny

but see, here's the one difference

microsoft can pump $texas into the xbox, meaning no matter what, they can up tech on it and make it look great

11/28/2005 10:59:14 AM

^^ Despite Sony's BS with the CDs I hope the XBox 360 fails because its from Microsoft.

They are "the evil corporation" that waits for other companies to innovate and then they find out there is money to be made and try to take over.

11/28/2005 11:02:33 AM

Quote :

"They are "the evil corporation" that waits for other companies to innovate and then they find out there is money to be made and try to take over. "

Fucking communist.

They don't "try to take over" they DO take over, and in the process, make the shareholders and innovators very rich in the process.

The only reason microsoft is considered "evil" is because of socialist whackjobs like you that don't believe in the merits of unrestrained capitalism.

11/28/2005 11:05:54 AM

Quote :

"Fucking communist."

At no point did I imply that there should be government intervention. The constraint in this case is the consumers (who you implied all want it to fail - and this is the reason) - if the company is perceived in a negative way, people may not buy it.

Its just nice when a small American company can come up with an innovation and profit. It sucks to have a giant like Microsoft jump in and result in the destruction of that business and then outsorce the jobs to India.

I just see it from the point of view that if I have an idea then I should be able to profit from it instead of loosing to a big corporation because they have more lawyers.

Normally I would end a post like this with "here is hoping you can loose your shirt and home when this happens to you" but I honestly don't wish that on anyone.

[Edited on November 28, 2005 at 12:04 PM. Reason : +]

11/28/2005 12:03:41 PM

id rather sony fail too simply because, after the first year, ps2 sucked my ass with a few exceptions.

11/28/2005 12:05:36 PM

Quote :

"Its just nice when a small American company can come up with an innovation and profit. "

Good thing it's little guy vs. Microsoft in regards to the PS3 and the 360.

OH SHIT WAIT

11/28/2005 12:13:09 PM

This particular case wouldn't be a good example of that.

Sony and Microsoft are both evil, just slightly different kinds of evil.

11/28/2005 12:19:43 PM

evil or not, i needs my gaming fix.

11/28/2005 12:22:23 PM

True, so may the 'best' company win?

[Edited on November 28, 2005 at 12:23 PM. Reason : (or marketing dept)]

11/28/2005 12:23:15 PM

if i feel like playing another japanese rpg, jack and daxter, or rachet and clank ill be sure to buy a ps3....

11/28/2005 12:25:29 PM

metal gear solid 4?

11/28/2005 12:43:48 PM

Quote :

"every console has been sold at a loss since forever. software is where the money is made."

Every Nintendo console before the Gamecube sold at a profit.

That animated gif is funny, but I wouldn't take it seriously.

Quote :

"And why the fuck does EVERYONE want this console to fail? You'd think Sony would be higher on the shit list with the latest rounds of their tomfoolery."

I wouldn't say everyone wants it to fail. After all, thanks to MS I can finally play Street Fighter online (without getting on the PC) and they forced everyone else to step up their game in online functionality. That being said, there's plenty of reasons people want MS to fail.

Xbox 360 isn't just a game system, it's MS' attempt to basically get into every living room in America. They have not been secretive with the fact that they want more of an all-purpose "home entertainment system" than a pure gaming console. That's why they're losing so much money. They're packing more features into the console than anything that's preceded it. Sony is doing this too, but stick with me. Hell, Penny Arcade refers to the 360 as "a great platform", and basically admit that at this point the games are largely a secondary attraction.

I could write a small novel about this. Ultimately, many people oppose the mainstream movement of video games and the change in the market that comes with this. Take the MTV special earlier this year. People were pissed off that we basically learned nothing new about the Xbox 360 during the whole thing. MS and Sony trot all these dumb-ass celebrities like Paris Hilton and Tara Reid for their launch parties, knowing these people can't even count to 60, much less aim a gun in a FPS or make it through the first level of DK. Why? It gets more coverage in the press and makes the 360 the must-have gadget in the eyes of the consumer.

Then there's the Americanization of video games. Except for Ninja Gaiden and DOA, every major successful Xbox franchise seems to be some kind of FPS, which also brings out the snobbish PC gamers to scoff at all the Halo fanboys, or a ported PC game. Say what you will about Sony, but they already have announced sequels to Metal Gear, Devil May Cry, Tekken, and a Final Fantasy is inevitable. People might hate Sony, but the company has the best 3rd party Japanese developers working with them.

Quote :

"microsoft can pump $texas into the xbox, meaning no matter what, they can up tech on it and make it look great"

Oh yeah, that too. The degree to which MS was willing to bend over backwards to get a leg up with the original Xbox boggled my mind. It wasn't until they offered two free games with the system in 2002 that the momentum shifted from the Gamecube to their system. IIRC, after an abysmal initial launch in Europe, they lowered the price and offered several free games with the system. The company spent money trying to get as much exclusive content as possible and advertised everywhere.

Finally there's Nintendo fanboys. A lot of Nintendo fans (like me) are reasonable people with their own complaints about the company. However, a small segment of them are batshit crazy about the company and would give anything for a chance to fellate Miyamoto. Sony knocked Nintendo down a peg with the PS1, but Sony also picked up almost all the non-Nintendo franchises that fans love, so they're not as hated. MS on the other hand is much easier to villify. They knocked Nintendo down even further, not with some system with tons of great in-house software, but by spending tons of money on advertising and exclusive stuff until they were ahead. Nintendo fanboys love to point out that Halo 2 doesn't do anything Goldeneye didn't do (this is total BS, but they say it anyway). It was also really powerful, and ironically the best way to turn the Xbox into so-called "home entertainment system" was to mod it. Nintendo has their own problems and some of their business practices in the past are the stuff of legends, but the company has this other side (called the humble, likable Miyamoto) that people absolutely love and reminds them of their fondest childhood memories

Dammit I have a project I need to be working on and instead I spent an hour composing this post that no one's going to read anyway.

[Edited on November 28, 2005 at 12:50 PM. Reason : dammit i'm still posting]

[Edited on November 28, 2005 at 12:50 PM. Reason : yeah i haven't stopped]

11/28/2005 12:44:47 PM

I read it all


I could read about video games all day.

11/28/2005 1:07:33 PM

i read it

but you didnt really say much

11/28/2005 1:08:02 PM

i read it all but dont really think much of it either. instead of 3d platformers and jap rpgs you have FPS's. personally i just feel like you can do more with a fps than a 3d platformers (though arguably not an rpg, but i can only do so many of those).

beyond that you have games like socom and metal gear which meet their opponenets (like them or not they are close enough to compare), ghost recon and splinter cell.

i personally just like the fps's, the racing games better (forza, pgr), the fighting games about the same, and the other good titles: KOTOR, Crimson Skies, Mechassault, Panzer Dragoon, JSRF, Ninja Gaiden, Full Spectrum Warrior, etc.

[Edited on November 28, 2005 at 1:18 PM. Reason : though im interested to see ps3 vs 360 lineup, though i have a feelingi ts more of the same for both]

11/28/2005 1:18:08 PM

Quote :

"a small segment of them are batshit crazy about the company and would give anything for a chance to fellate Miyamoto."

Thats Lokken

11/28/2005 1:19:49 PM

nah

i just know quality when i see it

and that aint xbox

11/28/2005 1:28:10 PM

Quote :

"Nintendo fanboys love to point out that Halo 2 doesn't do anything Goldeneye didn't do (this is total BS, but they say it anyway)."

hmmmm
that makes sense to me, to be honest with you

what does halo 2 do that goldeneye couldn't/didn't?

11/28/2005 1:30:40 PM

Halo 2 doesn't do anything Goldeneye didn't d

11/28/2005 1:31:49 PM

i loved both, but to ill do my best:

better controls: 2 sticks beats 1. goldeneye was great for its time, but i find the control more precise with the 2 sticks instead of using buttons. i guess it has less to do with goldeneye than the fact that xbox just has the better fps controller overall i think. the ability to use the thumstick buttons is nice as well for things like zooming.

vehicles: say what you like, they make multiplayer 10x more fun when in big games.

support for more players: again more to do with xbox vs n64, but you cant ignore it.

2 weapons: i personally like the ability to only carry 2 weapons at a time. adds a little more strategy in my opinion as you have to guage what you'll be doing and how much ammo you can carry for specific weapons.

graphics: again xbox vs n64, but still undeniable.

more modes: while many of the modes they added sucked it was still nice to have. you could also create your own gaming format which was nice.

melee/grenades: adds other strategy elements (yes i know goldeneye had grenades, but you had to switch to use them, plus using rockets/grenades was likely to slow down that game insanely at times).

coop: nuff said.

so overall: both were very well tuned games and incredibly fun to play. most of the things that halo has over goldeneye stems from xbox being a hell of a lot better than n64 hardware wise (obviously not surprising). the refined controls, support for more players and thus larger environments (and eventually online play) took the console fps to a newer level, must like goldeneye did.

i dont think ports like UT that came before halo really did it as well b/c 1. i hate ps2 controllers for fps's and 2. they paled in comparison to games designed specifically for consoles.

did it improve insanely over the goldeneye (or any other) formula? no, but the hardware leaps and fine tuning made it just as fun, if not better.


[Edited on November 28, 2005 at 1:56 PM. Reason : keep thinking of more]

11/28/2005 1:43:28 PM

Quote :

"Halo 2 doesn't do anything Goldeneye didn't d"

cyrion, if you have to answer that question there is zero chance that the person you are responding to will agree/listen.

11/28/2005 1:55:01 PM

i know, but i really have nothing to do.

11/28/2005 1:56:32 PM

meh

11/28/2005 2:10:42 PM

^^^^Let's not forget much better AI. I passed many a Goldeneye mission waiting for me enemies to charge blindly around a corner (and I went through all of them on all difficulties).

Quote :

"Thats Lokken"

yep

It's amazing the way Nintendo will give out their positions on the market and people will spout it like gospel without so much as even questioning the company. Not saying Lokken does this, but I see it a lot. They also love to call PS2 and Xbox owners "graphics whores".

Quote :

"i read it all but dont really think much of it either. instead of 3d platformers and jap rpgs you have FPS's."

Ummm, no. The PS2 may be overrun with those, but it has tons of niche games like Rez, Guitaroo Man, Guitar Hero, Zone of the Enders, Katamari Damacy, Space Channel 5, and The Mark of Kri. Not too mention a lot of the older 3rd party franchises reappeared on the PS2 like Contra, Gradius V, and Mega Man. Note however, that this isn't due to some great game design philosophy by Sony as it is due to them being in first place. Those games appear on Sony's system by default to reach the widest audience possible.

Sony gained a little geek cred (at least in my eyes) when they built this stable of developers who put out some pretty good, original games for their system. Ratchet and Clank, Sly Cooper, God of War, and a few others really surprised me.

Quote :

"Panzer Dragoon, JSRF"

I like these games too (at least Panzer Dragoon), but they sold like crap on the Xbox. They were also released early in the system's lifespan and the rest of games on your list fit right into the stereotypical Xbox franchise (except MechAssault I guess). I suspect if Panzer Dragoon had been released on the PS2 another one would've been announced by now.

Quote :

"im interested to see ps3 vs 360 lineup, though i have a feelingi ts more of the same for both"

Yeah, me too. It's pretty much Halo, PC games, and Rare vs. the usual suspects on the PS2.

[Edited on November 28, 2005 at 2:30 PM. Reason : OMG I said "geek cred"]

[Edited on November 28, 2005 at 2:32 PM. Reason : another 30 minutes wasted]

[Edited on November 28, 2005 at 2:33 PM. Reason : *sigh*]

11/28/2005 2:29:42 PM

The problem with the XBox as a video game console is that the second word got out to the masses that it could do so much more than just play games with a mod chip, no one really cared about the games anymore.

If they had made the 360 anything other than a home entertainment system that played a video games they'd have fucked up horribly.

11/28/2005 2:48:22 PM

Quote :

"I passed many a Goldeneye mission waiting for me enemies to charge blindly around a corner (and I went through all of them on all difficulties). "

oh yea...unlocking all the cheats is a real breeze also

11/28/2005 2:51:19 PM

meh, if it ends up having good rpg's on it I'll probably end up buying it. basically, if oblivion runs shitty on my computer and they come up with some good american style rpg's for it... yeah

11/28/2005 2:52:05 PM

Quote :

"Ummm, no. The PS2 may be overrun with those, but it has tons of niche games like Rez, Guitaroo Man, Guitar Hero, Zone of the Enders, Katamari Damacy, Space Channel 5, and The Mark of Kri. Not too mention a lot of the older 3rd party franchises reappeared on the PS2 like Contra, Gradius V, and Mega Man. Note however, that this isn't due to some great game design philosophy by Sony as it is due to them being in first place. Those games appear on Sony's system by default to reach the widest audience possible. Sony gained a little geek cred (at least in my eyes) when they built this stable of developers who put out some pretty good, original games for their system. Ratchet and Clank, Sly Cooper, God of War, and a few others really surprised me."

Ill give you this to some degree. Hopefully Xbox will start to get those games if it becomes first, because I really didn't like the standard games on ps2 as much as those on xbox. I think there were quite a few nice lil niche titles on xbox too though (i tried only to mention big ones, though i guess my love of sega games clouded my judgement on a few).

I'm not overly impressed with the 360 now, but I have high hopes for it (though ps3 has impressed me vid wise).

If Mechassault doesnt fall into the formula, I don't see how KOTOR and crimson skies do though.

11/28/2005 2:58:25 PM