Microsoft Losing Lots of Money on the 360 - United Bimmer Community

**komodo** · 11-27-2005, 11:09 AM

I knew they were losing money, but not this much....

Quote:

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.

craig · 11-27-2005, 11:11 AM

ouch. but oh well, they have enough money. they can handle it.

**Hoppy** · 11-27-2005, 11:33 AM

well the under price it probbily for one of two reasons. one, because they realize no one would buy it at full price. or two they are keeping the price low to try and kill PS3.

though i think its pointless. Playstation outsold n64. PS2 out sold Xbox and im willing to bet PS3 will outsell XBOX 360

**RealBmw 02** · 11-27-2005, 11:40 AM

They must be making money in other aspects of the deal. I.E. modifitcations or additions to the unit or the live aspect of it. I am not sure, but there has to be a good reason that they would release a product that would loose money for the company.

**voca** · 11-27-2005, 11:45 AM

they are deffinitely not paying those prices. microsoft wouldn't do that. sure they will make money on games and other items for the console, but it wont offset these estimates.

witeshark · 11-27-2005, 12:57 PM

And they have bad units to fix too

DEATH2000 · 11-27-2005, 01:36 PM

That sucks. there losing more money on teh 360 than they did with the first gen xbox. But the xbox live service should help em to recoup there losses, since it is kinda costly.

**donald1476** · 11-27-2005, 01:41 PM

Source ?

**TerryY** · 11-27-2005, 11:00 PM

Another news story

http://news.com.com/Microsoft+loses+...60.html?tag=nl

I saw another that quoted the name of the company that came up with the prices--seemed to be a respectable source according to the article.

The $$$$$ are in the games.

**Rooz** · 11-27-2005, 11:23 PM

From what I hear, Microsoft is selling them a little over cost, BUT the games are pretty pricey....

**komodo** · 11-28-2005, 12:26 AM

Yeah, they're supposted to make all their money from games and live.

**c1apton** · 11-28-2005, 05:47 AM

Do you really believe they're losing money? "I Don't THINK SO". They manufacture so much and own subsidaries of other cos' - it's a formality for them to show a product loss. They make truckloads of $$$ via their business solutions division. Bus Solutions Div. - LEASES (not sells) but leases programs to all sizes of companies for like 3-5k per MONTH just to use the programs contured to their business like UPS, Amazon, and a ton of manufacturing companies. Gates' salary is just a small % of what the company actually makes.

**TerryY** · 11-28-2005, 08:11 AM

Quote:

Originally Posted by c1apton

Do you really believe they're losing money? "I Don't THINK SO". They manufacture so much and own subsidaries of other cos' - it's a formality for them to show a product loss. They make truckloads of $$$ via their business solutions division. Bus Solutions Div. - LEASES (not sells) but leases programs to all sizes of companies for like 3-5k per MONTH just to use the programs contured to their business like UPS, Amazon, and a ton of manufacturing companies. Gates' salary is just a small % of what the company actually makes.

And that is how they can afford to Lose money on the X-box.
That is how MS wins market share. Lose their butt on the initial offering and come out ahead on the "little stuff" like the games sold separately.

That is how HP and others make money on printers. You are almost given the printer so you can pay $30 for an ounce of ink in a fancy plastic bottle/cartridge.

**c1apton** · 11-28-2005, 10:42 AM

It's called "virtual profit". Similar to Apples' I Tunes - they buy a copy of a song then sell it over the net a bezillion times for a $1.00 per copy - never once does anything material change hands. Design a game, copy to plastic disc (for minimal investment) then sell it for $30+. I know that's simplified, but being in the music industry - the average CD from preproduction to final sale, costs the artist/record company .14cents per CD. On an inside note, they make even more $$$ on hats, t-shirts & other swag. Then they cry foul over copyrights - go figure???

**projal147** · 11-28-2005, 10:59 AM

yea exactly... i read an article this morning in the wall street journal that when the 360 debuded many retailers would not allow people to buy a 360 without purchasing games or accessories. the average bill on tues for people buying a 360 was $800 it was believed to be.. also most retailers have run through their stock of 360, so they wont have any more till next year