MS to lose $75 per X360

well i guess we will learn soon enough haha . I still say it can be made for 375$ I think they designed a great console that is very cost effective

 

A reasonable strategy would be to charge a higher amount while the demand is bigger than supply and then cut prices. Besides making more (or rather losing less) money it has the added benefit of higher percieved value. It's a well proven marketing trick that something that has 359 crossed out and replaced with 299 seems a lot better deal than just something priced at 299.

 

Teasy,

I was referring to 50 million in advertising costs that I estimated MS would be spending.

..although your number might prove to be more accurate in the end

 

$50M seems small.

I seem to have rememberd the advertising campains being 10x that. This news blurb from 2001 seems to indicate MS had budgeted $500M for the Xbox.

 

Theym ay spend more .


Anyway the good thing about marketing is you can share spending with other companies .

I.e make a comercial for the x360 + dead rising with capcom paying for some of the costs .

But as for 50m didn't ms spend 150m in the first year for the xbox ?

 

SEGA America alone spent $100 million on their Dreamcast advertising campaign ( http://www.clickz.com/news/article.php/6251 )

i.e.: this $100 million did not include the budgets for the advertising campaigns for Europe & Japan




for Xbox 360 's worldwide launch, I anticipate MS will spend at least $200 million on advertising worldwide

 

Everyone should remember that this is MS. This is the company that gave I.E. away for Free just to gain the advantage in the internet browser market when Netscape was charging a fee for theirs. Look how that has turned out. (There are many other examples such as this mainly software but still proves a point) Although this is more of a Hardware avenue MS thinking is still dominace. The reason why? Its a gateway to so many future possibilites and technologies (some still to come). The MS execs. are talking about the future of consoles as a media gateway in the living room. I think they know it takes some sacrifice (Way painful in $$ when we look at it ) but they are in the business to win. They also have the cash reserves to grind their way to the top even if it means losing money in the beginning but solidifying its position (and profit) in the end. Even if they fall behind they have the $$ and connections to put them in the position they want to be in. In most cases when MS makes a commitment like this both financialy and business wise they usually succeed and at the very least are competitive and profitable.

Love em or hate them MS has always been agressive in any sector it pursues. It will pull no punches and is in this to win. Now if they succeed is up for debate but I certainly wouldnt underestimate them.

 

well jpr i expect when sony launches ms will hit back by making first party titles from around launch cost 20$ , so pdz , kameo and others will come in at a low price .

Cost of the console is not the only way to make a system attractive to the customer

 

Giving away software isn't the same as giving away hardware, plus read the comments from MS officials. Its quite clear they plan to make a profit this generation.

 

I find this thread rather amusing. On one side you have people that believe the only numbers out there, and then on the other side you have, um teasy? that doesn't belive any of the numbers.

It's fine to have an opinion, but to argue this point isn't by using past console launches is is a bit foolish. We already know MS is making a bigger and more powerful box this time using custom hardware. That word 'custom" should be the only clue you need to know regarding them loosing less money then last time.



Sure $375 is believeable, considering how much more hardware power the dollar would buy these days and the improvements in technology (for adding multiple CPU's on a single die). you simply can't compare xbox pricing to xbox 360 pricing. you could say the only thing in xbox that was ahead of PC's was the GPU and sudio chip from nvidia. The rest of the hardware was already outdated buy the time it released. (CPU, RAM, etc...).

Besides, when has teasy been an expert on MS and the xbox? i'd argue he's never been

 

You know Quincy, one day you'll lose that chip on your shoulder and learn some manors and respect. If you want to argue with something I've said then talk to me, not about me.

As to your argument. I don't believe one number from an analyst, how you turn that into any of the numbers is something only you know Also using custom hardware (to a degree everything is custom or not custom) doesn't guarentee lots of extra performance at a cheaper price. Its more sensible to expect one or the other, the same level of performance cheaper or a higher level at the same price. I'm no expert of course and didn't claim to be, but the last time I checked your not an expert on much either. Mr Allard on the other hand should know about this kind of thing yes? What does he say on the matter?

Well would you look at that Quincy, Mr Allard agrees with me As I said, higher end performance then XBox but more costly to produce at launch (they can likely accept the higher initial losses since they know the hardware losses later will be far less then with XBox).

 

Just wanted to point out that custom doesn't necessarily mean cheaper. A lot of times it ends up being more expensive, but does the job better than non-custom. What MS is going to do is have process shrinks that will significantly lower the cost overtime.

 

Oh relax, other than the comment i made regarding you being an xbox expert (which was obviously intended to be a joke) I really don't see where you get the idea that I have a "chip" on my shoulder. haven't we argued enough directly as it is already?

Well do you see any other numbers to formulate your argument against? in this case "any" numbers is the same as "one" number. let's not argue about semantics.

This isn't the point I was arguing.

um, well for one thing that's a good quote, but I've already read it. Allard is talking about about xbox 360 costing more in relation to silicon/die area, however what he did't say was that xbox 360 costs more as a whole to produce. He didn't even get specific if this was just related to the CPU die, or GPU die, or both as a whole. let's say he meant both as a whole for a worse case scenario.

You're forgetting that MS is actually using less chips this time around. They aren't including a fancy 200 mhz audio chip, they are using a CPU to handle the audio. So on one hand say he is indeed referring to the GPU/CPU costing more per silicon/ die area when compared to xbox 1. Sure, however is MS isn't using an expensive Nvidia made audio chip, it could still end up costing less then what they spent for the same functionality in the first xbox.

For example.

Xbox 1:
CPU 35 dollars
GPU 50 dollars
Audio 20 dollars
total = 105 dollars


Xbox 360:
CPU 45 dollars
GPU 45 dollars
total = 90 dollars

Anyway this statement from allard doesn't prove your point at all. when did this thread become an arugment about the chips by themselves costing more, and not the console as a whole costing more?

Sheesh you don't need to get so defensive teasy. Allard didn't agree with you at all, you just imagine he did.

 

Same old same old, if you get called on something then I'm being defensive and need to relax. Ah its good to see that some things never change..

Allard said that 360 is far more expensive when it comes to die area and silicon. Firstly he was asked about 360's cost as a whole, so I'm sure if it actually cost less overall then XBox he would have said so. Rather then just talking about how much more expensive 360's chips were. Second if 360's main chips cost far more then XBox's then no $20 saving on a sound chip is going to make 360 $50 cheaper then XBox..

 

Tomorrow on Paramount Comedy, its like Trailor Park Boys.. but on a forum..

 

If MS sell Xbox360 for $300 in the US then it will be $550 here in the UK (£300).
They may be losing $75 in the US, but they are making $175 profit per console over here

 

Allard actually suggested that wouldn't be the case in an interview, with CnVG I think. He said something like there wouldn't be a repeat $450 situation, from which I understood $300 in US became $450 in the UK. Not trying ot get anyone's hopes up, but this time we *might* see it nearer the £200 mark. :?

 

sheesh man, come on. i mean defensive whenever somebody wants to argue an opinion with you, you feel the need to run out and find a quote you feel is appropriate to back it up and say "look homer simpson agrees with me". There's no need really as this is all just opinion. That's what I called defensive...

Aye, how true...

Yeah well he didn't and he specifically worded his reponse to avoid saying that. So there's not much point in inferring anything beyond that.

I see you'e ignored any reasoning to the contrary, so we'll just have to agree to disagree on that point.

 

I wish... in that case I might be getting one too...