Each Xbox 360 Costs $715 to MFT?

A

Alpha_Spartan

Regular
According to Insider Scoop, the world's largest software maker is losing upwards of $300 per console sold. From the article: "A high ranking friend at IBM, one that worked on the Xbox 360 chip design, tipped us regarding the real expenses involved in manufacturing the Xbox 360... 'It costs Microsoft approximately $715 to make, the manufacturing costs are still too high, another reason why they’re producing relatively small quantities.'”
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Source

If this is true, it's damn near crazy. I can see why they came out with the Core system and the insanely high-priced add-ons. Buy more controllers...please!!!!

What does that say about PS3 costs? It's definately going to cost more than Xbox 360 to manufacture. How will Sony manage that? Are we talking two SKU's? A higher launch price? Cut features?
 
Ive seen a few reasonable estimates of a BOM for the 360 and this is either bogus or the Xenon (we did agree on Xenon being the holdup right? :) ) yields are so low that its driving up the per unit costs on the CPU by a few hundred bucks...
 
Alpha_Spartan said:
It's definately going to cost more than Xbox 360 to manufacture.
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The less middle men, the less cost. The later they start to manufacture, the less cost.
 
Or it could be leaked bullshit by MS to combat the technology PR battle with Sony.

"It costs $715 it must be superior!!"

:D
 
Alpha_Spartan said:
I doubt MS brags about how much cash they're bleeding.
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Where's the link in the joystiq article? There it's just some "friend who worked at IBM".

This smells a lot like the recall rumors. And the Madonna trashing her Xbox 360 rumor. And the no shipments till Febuary rumor. And the "no ones buying an Xbox 360 in Japan" rumors (oh wait, scratch that one :LOL: ).

It utterly amazes me how much traction these things get. It's like the internet is a giant Ladies Sewing Circle.

.Sis
 
Bad_Boy said:
Yeah, I dont think any company does. lol
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Back during the .com days--the heyday of the internet startups--companies often bragged about it.

Jackass CEO: "We just spent 1.5 million on a superbowl ad!"

Fast foward 3 months:

Jackass CEO: "Many companies offer free soda and free food. We are the first to have 'Auto-Ass Wipers' installed in every bathroom stall!"

Fast foward 3 months:

Jackass CEO: "We will change our name and try for an IPO. We need something with a .com in our name!"

Fast foward six months:

Jackass CEO: "We just laid off our entire support staff!"

Fast foward 2 weeks:

Jackass CEO (retired/vacationing): "The rest of you are now laid off!"

.Sis
 
:oops:

$715?....even the Premium pack isn't really compensating for the losses (better than the $300 package though). If this is true, I wonder how it would affect price droppage....
 
Oh no, I hope this doesn't turn into one of those quotes that is pored over excessively: they always lead to at least two theories on the real meaning.

Having said that, the way its worded seems to imply its manufacturing (as in assembly) costs. That can't be right. Frequenting these boards maybe I should know who assembles 360's for MS... but I don't.

I struggle to see where the costs could come from (having seen a few "estimated PS3 manufacturing costs" discussions on various boards) esp. as MS don't have the same GPU set-up as they had with nVidia. Post Christmas (ultimately unsourced) gibberish methinks.
 
Mmm if you were to take R&D, marketing, packaging, transportation, distribution,... into account it might cost as much as $715. But you also have to think about the price reduction Microsoft gets for large orders and such.

Microsoft lost more than 3 billion dollar on the original Xbox, they might want to break-even on Xbox 360, but I guess their first concern is getting as much marketshare from Sony as possible. I doub Microsoft will manage to make enough profit to undo the costs involved with the original Xbox.
 
Evil_Cloud said:
Mmm if you were to take R&D, marketing, packaging, transportation, distribution,... into account it might cost as much as $715. But you also have to think about the price reduction Microsoft gets for large orders and such.
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I don't think they would be taking R&D into account, or marketing. Packaging transportation and distribution maybe. This cost is refering to the costs of the components and the costs of assembly/manufacturing only. Now that said, I would be surprised if the costs were actually this high.
 
Alpha_Spartan said:
Source

If this is true, it's damn near crazy. I can see why they came out with the Core system and the insanely high-priced add-ons. Buy more controllers...please!!!!

What does that say about PS3 costs? It's definately going to cost more than Xbox 360 to manufacture. How will Sony manage that? Are we talking two SKU's? A higher launch price? Cut features?
Click to expand...

Not that I believe it, but if it costs 715$ to MFT, then they are taking a bigger hit than 315$ because retailers like to make money off each unit, and then there are transportation costs, packaging... blah.

Edit: guess it was so obvious to see everyone else wrote it too. I just gazed qucikly on the replys. Sorry :) Maybe I should add something new and say 'hey it is a joystiq report'.
 
Last edited by a moderator:
IF true....Then its around what is expected with doing business with IBM - At first MS made a deal with the R&D and then IIRC IBM said that MS has to decide what to do about maunfactoring. Then we've never heard of the dealings that were struck with IBM on manufactoring. IBM doing both R&D and then manufoctoring then they must've paid and an arm and a leg. (IBM services are pretty pricy)
 
dubyateeeff said:
Not that I believe it, but if it costs 715$ to MFT, then they are taking a bigger hit than 315$ because retailers like to make money off each unit, and then there are transportation costs, packaging... blah.

Edit: guess it was so obvious to see everyone else wrote it too. I just gazed qucikly on the replys. Sorry :) Maybe I should add something new and say 'hey it is a joystiq report'.
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In regards to the highlighted part: it is my understanding that retailers make no money on the consoles themselves, and often take a loss on each unit, roughly a few dollars. This is part of the reason why bundling is pervasive...

.Sis
 
Article said:
"...the manufacturing costs are still too high, another reason why they’re producing relatively small quantities.”
Click to expand...

To me this line is a bit of a dead give a way. Bunk.


Alpha_Spartan said:
Sony has about as many (or more) middlemen than MS.
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I think 'one' was referring to the fabbing of the main components (cpu/gpu)?
 
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