Microsoft losing profit again...

LaRazaUnida · #1 11-23-2005, 09:56 PM

Microsoft losing profit again...

Seems as if Microsoft is again taking a big hit. This time with each premium sold, they lose $126 dollars

Quote:

http://www.gamespot.com/news/6140383.html
Microsoft taking $126 hit per Xbox 360
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.

Thermal · #2 11-23-2005, 11:25 PM

Yeah thats to be expected, its really the accessories, and games that make the profit.

Hybrix · #3 11-23-2005, 11:58 PM

Well... Thermal is right. Who buys JUST the 360.

People subscribe to LIVE, then buy a few games.

Trust me, Microsoft wouldn't be doing this if they weren't going to have some sort of profit, and trust me.. they are going to make a lot.

Rayzn · #4 11-24-2005, 05:36 PM

Plus, I think Microsoft can spare a few dollars here and there. They are one, if not the biggest company out there. I heard that Microsoft only started to make a profit off the original xbox a year or so after it came out. I heard this by mouth so I am not sure if it is true.

dk_rare · #5 11-25-2005, 08:01 AM

Microsoft can afford it. Microsoft could probably afford to make a console twice as powerful as the PS3 and only charge half as much for it. Well, maybe, I dunno

LaRazaUnida · #6 11-25-2005, 12:13 PM

I just think its better to make a profit off of a system then lose money. Like Nintendo.

Echoes · #7 11-25-2005, 12:20 PM

Quote:

Originally Posted by LaRazaUnida

I just think its better to make a profit off of a system then lose money. Like Nintendo.

Wow, I never would have guessed. I always thought it was better to lose money.

Yet another quality post by Laura.

LaRazaUnida · #8 11-25-2005, 06:11 PM

Quote:

Originally Posted by Buckeye101

Wow, I never would have guessed. I always thought it was better to lose money.

Yet another quality post by Laura.

Yea, well if you would have READ the other posts stating, "how its ok" that microsoft is losing profit because they can afford it and it happened with the previous xbox so its ok for this one, ect. ect. you would have understood where I was being sarcastic in saying I always thought it was better to make a profit.
-Gah, Idiot- Napoleon Dynamite.

Mr_Snipes · #9 11-26-2005, 04:13 PM

But you have to remember that they said for each of the components that are in the X-Box 360. But if multiply each component by a couple of million and add in a discount for purchasing so many, then the actually loss is a lot less. Plus Microsoft is not trying to make money on the console itself. It does not suprise me one bit that they are selling the console for cheaper that what it actually cost. Because there is a lot less operating cost in producing the games that people purchase to play on the 360 console. So that is where the real money is. They don't care if they lose a little money on the console itself as long as they make it back on all of the games and X-Box Live purchases that come in.

CrispyCocaine · #10 11-26-2005, 11:04 PM

Microsoft lost even more money with the first xbox. They just got the money from the other divisions from Microsoft. Its no biggie to them.

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