News & Rumors: Xbox One (codename Durango)

[3dilettante]

One has to figure out what full production means before trying to figure out numbers

We already know ms has been producing xbox one retail kits as seen by the unboxing vidro last month.

Since this is all from Microsoft PR statements, reconciling them all could be due to things like:
1) the pictures taken of the "first" retail units are old
2) the description is innacurate or imprecise
3) the unboxing was of an in-house exemplar after the final version was decided

 

[Silent_Buddha]

Major Nelson's picture was supposed to be a shot in the arm regarding production.
But in business reality, it's not. It's a big sign that Microsoft had serious production issues, considering it's only NOW that he took this picture.

Eh? You [strike]can[/strike] can't start manufacturing retail boxed units until specs have been finalized. The CPU and GPU clocks were only recently finalized. Considering that they both ended up higher than they originally planned for, there isn't going to be a problem with the hardware.

As to production, MS has been around for a while. They have pre-order numbers. They knew roughly when they would finalize hardware. It'd be naïve to think they didn't account for all of that when planning their actual production and how many production lines they'll need to accommodate the flow of parts (case, PCB, SOC, drives, PSU, Kinect v2, etc.).

They are quite likely on schedule with regards to hardware production.

That probably means Sony probably started production at the very least 3.5 months before the November 30, pointing at a date at the very latest mid august.

Sony wasn't able to show retail production units until Gamescon. And they were just as limited as Microsoft in that regard, with partners showing PS4 games on PC/Devkits. Just as with MS, their final retail units were mostly restricted to their own booth.

So mid August seems reasonable as a start date, but certainly not the latest they could have started it.

Sure they might have a 2-3 week headstart (perhaps more, but I find that unlikely) on manufacturing, but that says nothing about how many manufacturing lines each company has contracted. That is going to be the most important bit when it comes to predicting how many consoles each company will be able to manufacture by launch.

I myself aren't predicting anything. Sony may make more. Microsoft may make more. We should find out around Jan. 23rd, 2014 for MS (Q2/FY2014 release date) and around the beginning of Feb. 2014 for Sony (Q3/FY2013 release date, they haven't announced a date yet). Although if either or both do quite well during the Holiday season, they may release the shipped numbers before then.

Regards,
SB

 

[dobwal]

I stated mid August, not July. Who do you think they can air-freight? Somebody's got to run the air fleet and there are only so many carriers , and air freight ain't cheap.

Not to mention that there are other businesses that are also loading up the holiday seasons and rates are not likely going to get any cheaper.

Air freight ain't cheap. But a volume that size would be done by contract and negotiate at a price only available to those that ship at such volume.

Plus MS has a Xbox manufacturing base in brazil and Xbox OG/360 were manufactured in Mexico and Hungary as well. There is nothing that says that MS is solely dependent on China for production especially since production in china isn't as cheap as it used to be.

Furthermore unless you know the intricacies of MS shipping contracts you can't make a definitive statement on cost. A shipper may have offered to float air freight cost for late launch shipments to go by air in an effort to win the bulk of the shipments over the life of Xbox one.

 

[warb]

I don't think MS are spinning as well as they could be, but the negative rumours of production troubles and downclocks are falling away.

Still taking 'Day One' orders. You'd expect those to be filled on day one.

 

[eastmen]

Who thinks it takes 3 weeks for freight to get to the states ? Your lokking at a week or 9 days tops. Customs may tske longer but thatsnot a big problem for xbox ones. It will go through customs in a few days

 

[Strange]

Air freight ain't cheap. But a volume that size would be done by contract and negotiate at a price only available to those that ship at such volume.

And the price would still have to cover stuff like jet fuel, which (as you should know) make up the majority of the costs. And yes, these boxes are huge and heavy for air freight, not to mention having very low to margins.

Your contract price may come at 25% off or even 50% off, I don't know, but it's not going to be cheap and margins are already as low as they are.

Giving a (relatively) low estimate of 15 USD air freight per box and, lets say 500k units over that month, you're asking Microsoft to pay up 7.5 Million USD just so they can move up the supply line by 2 weeks.

Guess what? 2 weeks later you won't have those boxes coming in by ship because they have been air lifted! So you're still going to have a massive headache 2 weeks later.

That's 7.5 Million dollars down the drain to solve an issue and at the same time creating another problem because you won't have the boxes coming in by ship.

In the end they won't have solved the short on supply issue by delaying the backlash by 2 weeks, if there is any backlash. If they have too little units 1 month into the cycle, airlifting 1 month's worth of supply will do nothing to help it.

Plus MS has a Xbox manufacturing base in brazil and Xbox OG/360 were manufactured in Mexico and Hungary as well. There is nothing that says that MS is solely dependent on China for production especially since production in china isn't as cheap as it used to be.

Manufacturing in Brazil is to fix the Brazil import issue, and is done in low numbers.

I seriously doubt they will assemble them anywhere but China at this phase of the console's cycle. Especially when it's Foxconn doing the assembly.

Furthermore unless you know the intricacies of MS shipping contracts you can't make a definitive statement on cost. A shipper may have offered to float air freight cost for late launch shipments to go by air in an effort to win the bulk of the shipments over the life of Xbox one.

Airlifting consoles, if they really do it, only are done to limit supply issues at the launch. There won't be any more airlifting once stock starts to be readily available, so you're not really going to get any chance to win any long term air freight contract.

 

[Strange]

Who thinks it takes 3 weeks for freight to get to the states ? Your lokking at a week or 9 days tops. Customs may tske longer but thatsnot a big problem for xbox ones. It will go through customs in a few days

You need to get your expectations in line with reality. A month is what it takes to cross 1/3 of the globe. Container ships aren't exactly the fastest way to get around the world.

http://www.cypressindustries.com/faq_freight.html

How long does it take to ship from China to the US?
Typically, shipping via ocean from China to the US takes approximately 4-5 weeks. Additionally, airfreighting goods into the US takes 7 days for bulk shipments.

How much does ocean shipping and air shipping cost from China?
Estimates of China freight shipping costs for air and ocean are shown below. These costs are to be used as estimates only and can vary depending on the season and oil prices.

Air 5-40lbs $8.50/lb 40-100lbs $6.50/lb. 100-150lbs $5.00/lb. 150-1000lbs $4.50/lb. > 1000lbs $2.50/lb.
Ocean 20’ container $3800 40’ container $5000 *LCL > 1 Pallet $750 > 1 Pallet $550/pallet

2.50/lb for Air.

Considering a Xbox one with all the boxing should weigh around 10 pounds per unit, my estimate of 25 USD from UPS seems to be shockingly accurate.

 

[AlphaWolf]

That faq also says it takes 7 days for air... You might want to shop around.

 

[Rangers]

You're using estimates from UPS to figure out what MS will pay?

That's 7.5 Million dollars down the drain to solve an issue and at the same time creating another problem because you won't have the boxes coming in by ship.

7.5 million is pocket change to MS even if it is that much.

Even your "$25 per unit" figure, high imo, Yusef Mehdi just appeared to say One is break even or low margin at worst. So you can probably absorb that $25 if needed. Maybe take you from $25 profit to break even.

Anyways I'm not sure what the argument is about, MS will have plenty of units in stores and what do we care about their bottom line?

MS said yesterday that multiple millions of units will be available this year. So that should kill off the yield rumors.

They're not so much rumors any more imo as certain people holding on to a bitter, illogical proxy war just for the sake of it. Seriously how do you have yield rumors on a product that's now received two upclocks?

As I always disclaim though, it's not like there are ever enough launch consoles. So it's normal to be limited to some extent.

If you asked me on penalty of death which of the two next gen consoles will ship more in it's first quarter, I'd flip a coin at best. Probably I'd lean Xbox.

Also, since there's more than enough bashing of MS alleged missteps, I sometimes like to point out the positives, and I will say they continue to dominate the conversation since E3.

Things like showing us a pallet of newly manufactured Xbox's, unboxing a retail unit, giving us videos hyping up the advancements of the new controller, dripping out a release date, these are the types of things MS has a feel for. A feeling like we're in the loop with a steady drip of news.

 

[Strange]

That faq also says it takes 7 days for air... You might want to shop around.

You might want to re-read the entire conversation. I've never claimed air freighting will take a month, and consoles by default will be shipped by ship, which indeed takes a month.

You're using estimates from UPS to figure out what MS will pay?

7.5 million is pocket change to MS even if it is that much.

Even your "$25 per unit" figure, high imo, Yusef Mehdi just appeared to say One is break even or low margin at worst. So you can probably absorb that $25 if needed. Maybe take you from $25 profit to break even.

Anyways I'm not sure what the argument is about, MS will have plenty of units in stores and what do we care about their bottom line?

I'm using UPS air freight figures and various other sources to figure out how much air freight is probably going to cost them IF they air freight to validate the idea that they would even do it to to add about 3 weeks of supply at launch day at the expense of 3 weeks of no supply afterwards. Many people have not shipped anything through air freight and obviously have no idea how freaking expensive it is.

7.5 million may be pocket change but they'll only do it if they perceive the action of paying 7.5 million as worth it.

 

[eastmen]

I would wager having more units for nov and dec is more important than having few units in january.

Depending on the amount of units by boat ms will be able to charter a full boat on thier own amd it will take less time than if you and I charted freight since wed have to wait for room on a boat for ourself

On the flip side ms would most likely charter a shipment on plane too and pay for it themselves and get better rates

Ms shipped by boat and plane for the 360 launch. I dont see what would be diffrent than then

 

[Strange]

I would wager having more units for nov and dec is more important than having few units in january.

Depending on the amount of units by boat ms will be able to charter a full boat on thier own amd it will take less time than if you and I charted freight since wed have to wait for room on a boat for ourself

On the flip side ms would most likely charter a shipment on plane too and pay for it themselves and get better rates

Ms shipped by boat and plane for the 360 launch. I dont see what would be diffrent than then

You seriously, seriously underestimate cargo ships.

According to the pictures taken, the 40 foot containers can fit around 2 wide, 2 high, and probably 12 deep, equaling approximately 48 pallets. One pallet probably contains 54 Xbox ones, so one 40 foot container will fit 2592 xbox Ones. a million units a month will only amount to at most 400 40 foot containers a month, or around 800 TEUs.

You should also note that modern container ships easily have capacities of 5000+ TEUs, many in the 10,000+ class, so there is no way in the world they will charter a full boat on their own. What you're suggesting is outright silly.




Airlifting will lead to you have a couple more units for November, at the cost of having a few less in December.

I don't doubt they'll utilize airlifting to fix certain supply issues, like a couple of hundred ~ thousand units, but the vast majority of boxes will surly be going through boat.

 

[Dave Baumann]

Eh? You can start manufacturing retail boxed units until specs have been finalized. The CPU and GPU clocks were only recently finalized. Considering that they both ended up higher than they originally planned for, there isn't going to be a problem with the hardware.

(Assuming that's meant to say "You can't start manufacturing...") That's actually not strictly speaking the case. All you need to know are the bounds (characteristics) of the ASIC's and you can make an update through software to update the specifications if you deem those bounds are capable of higher clocks and exhibit the correct thermal and electrical characteristics.

 

[Silent_Buddha]

Airlifting will lead to you have a couple more units for November, at the cost of having a few less in December.

If they resort to that they'll likely keep flying in shipments throughout December if demand is high and then let container ship's catch up in January when sales generally slow.

Yes, it is expensive, but it's potentially even more expensive over the course of the generation if you fall too far behind your competition. This is, of course, assuming that Sony is somehow managing to allocate more units per week than Microsoft.

If Sony and Microsoft end up with roughly the same weekly allocations, then I doubt Microsoft would continue to ship by air. Again, assuming they feel the need to ship by air in the first place.

(Assuming that's meant to say "You can't start manufacturing...") That's actually not strictly speaking the case. All you need to know are the bounds (characteristics) of the ASIC's and you can make an update through software to update the specifications if you deem those bounds are capable of higher clocks and exhibit the correct thermal and electrical characteristics.

Whoops, yes, I meant, "can't". Off to fix that typo.

Regards,
SB

 

[dobwal]

2.50/lb for Air.

Considering a Xbox one with all the boxing should weigh around 10 pounds per unit, my estimate of 25 USD from UPS seems to be shockingly accurate.

And that still like trying to estimate the cost that McDonald pays for an ounce of Coke based on the cost of a 24 pack bought from Sam's club.

No doubt air freight cost a lot but the tactic has employed before by Sony with the PS3 that from all accounts was a far more lossy console than the Xbox one.

Plus there are strategies to minimize costs like allocating most of the early production to regions that are geographically farther away and air shipping to only the closer markets.

It's a one shot deal and $15-$20 million isn't enough to keep MS from maximizing units available at launch. The cost of air shipping a half million units won't even equate to 0.01% of the expenses incurred by MS over the life of the Xbox one and won't be a cost that represents an obstacle to profitability.

It's like saying a hourly wage based worker won't leave 5 minutes early because of the loss it represents to their annual salary.

 

[Rangers]

No doubt air freight cost a lot but the tactic has employed before by Sony with the PS3 that from all accounts was a far more lossy console than the Xbox one.

It was employed with 360 launch too.

 

[Strange]

And that still like trying to estimate the cost that McDonald pays for an ounce of Coke based on the cost of a 24 pack bought from Sam's club.

No doubt air freight cost a lot but the tactic has employed before by Sony with the PS3 that from all accounts was a far more lossy console than the Xbox one.

Plus there are strategies to minimize costs like allocating most of the early production to regions that are geographically farther away and air shipping to only the closer markets.

It's a one shot deal and $15-$20 million isn't enough to keep MS from maximizing units available at launch. The cost of air shipping a half million units won't even equate to 0.01% of the expenses incurred by MS over the life of the Xbox one and won't be a cost that represents an obstacle to profitability.

It's like saying a hourly wage based worker won't leave 5 minutes early because of the loss it represents to their annual salary.

You're comparing apples and oranges.
Freight costs are very dependent on gas prices that the plane actually consumes to get from one place to the other. This makes their costs very easy to estimate, and comparing it to the costs of the coke drink itself is mind boggling.

A lot of the cost of a 24 pack actually comes the packaging instead of the formula. The actual drink itself is dirt cheap.

Air shipping half a million units @ 25 each is 12.5 million in extra cost for very little reason. The matter of the fact is that it's not going to solve the supply issue. Considering their revenue per quarter is ~4.5 billion, 12.5 million is not a small check that they can just give away.

I'm not saying they won't air freight, but I'll assure you they won't take up the majority of the shipments leaving the factories in November.

Plus, most people report 360/PS3 as much more supply constrained, which probably led them to resort to much more extreme solutions last gen.

 

[baten]

Airfreight cannot be done massively at the same costs. You can charter one or two planes to come from China to USA, but if you want to charter 20 full plane shipments, you have to take in account that some of these planes MUST return from USA to China EMPTY to reload.

 

[dobwal]

You're comparing apples and oranges.
Freight costs are very dependent on gas prices that the plane actually consumes to get from one place to the other. This makes their costs very easy to estimate, and comparing it to the costs of the coke drink itself is mind boggling.

A lot of the cost of a 24 pack actually comes the packaging instead of the formula. The actual drink itself is dirt cheap.

Air shipping half a million units @ 25 each is 12.5 million in extra cost for very little reason. The matter of the fact is that it's not going to solve the supply issue. Considering their revenue per quarter is ~4.5 billion, 12.5 million is not a small check that they can just give away.

I'm not saying they won't air freight, but I'll assure you they won't take up the majority of the shipments leaving the factories in November.

Plus, most people report 360/PS3 as much more supply constrained, which probably led them to resort to much more extreme solutions last gen.

The logistic of air freight cost and it effects on margin would be seriously considered if the air freight was meant as an ongoing method of shipment. It's not. Its simply a one time cost to maximize the units available to the market during the holiday season. January and February are convenient times for shortages while shortages during the month of November and December are way less accommodating.

You want to be the most accommodating when demand is the highest even if you can't satisfy total demand.

And when looking at -4.5 dollars in losses you are not going to look to nickel and dime during one of your most deepest venture into silicon design with hopes of commercial success for your flagship hardware device which represents 60 to 70% of your hardware business. Especially at a time where you are starting a transition to become more of a hardware company.

For a company that makes 1.8 billion in net profit a month with a 50 billion dollar war chest worrying over 25 million is like your average wage worker worrying over 25 cents.

Nevermind the concept of maximizing the number of preorders that can serviced efficiently.

 

[Jwm]

Too many topics that I want to touch on, but none of them really fit into the topic of this thread.

So there is this: http://www.youtube.com/watch?v=8QrZP0AmUvk which has a few interesting bits.

Mod: Can you please label what a link is - MS talks about XB1 or somesuch. Also you can use This has the convenience of providing the YT movie title as a descrption.

There is really no updated info on the TV features, articles are from May or June. Then there is this:

** Supported television tuner or cable/satellite set top box with HDMI output and HDMI cable required (all sold separately).

Curious as to what a supported tuner will be?