What HW cost reduction options does XB1 have?

[-tkf-]

but not enough people on the console side have figured out Digital downloads yet and will get upset if they buy a console and can't put a disc from game stop in it.

I am trying to figure it out, i bought a 41GB game on PSN, started playing when the first 6GB was down (thanks to Sonys cool segmented technology), and wohoo.. now i am waiting for the next lump to download.
Seems my PS4 will burn through the night and get the rest..

20 Mbit download, 41GB game, i don't think so. At least it was cheap thanks DieHard's trick..

 

[eastmen]

XB was a huge loss leader. MS just dropped the price and endured the expense to establish the brand.

which goes with my point of a price drop not being indictive of how much something in the package costs

So your saying MS made a console with a $50 profit margin and then instead of dropping that price margin to be competitive, removed a $20 Kinect camera to hit the new price point?

MS tested many price points of the bundle before committing to the $400 price point sans Kinect. The internet was able to make Kinect a villain in this saga there are even devices to block the camera on the Kinect being sold. The removal of Kinect at this point in time allows MS to distance itself from what the internet has claimed is an MS that doesn't care about games.

We've plenty of sources and evidence Kinect is costly. $50 has to be a sane minimum.

$50 is not costly when it puts it under the chips and ram and not much more ahead of the optical drive

I think they've figured out download just fine. It costs more and you can't share your content or sell it on. Especially next to mobile where download is dirt cheap, the inflated prices of download for the consoles is always going to be a significant barrier. A cheaper download only console could work, but it's going to cost the user more in the long run. Quick price check between XB Live store's most popular games and Shop To:

COD:Ghosts. £55 download, £31 disc
FIFA 14 : £55 download, £37 disc
BF4 : £55, £35
Titanfall : £55, £30
Sniper 3 : £50, £42
Transformer : £55, £35

You just have to wait on sales , I picked up plants vs zombies for $10 less than retail during a sale.

Factor in the added functionality of the cheaper version and it's pretty clear why downloads aren't the primary distribution choice by gamers. Therefore, removing the option to play discs would create a pretty niche product. Could MS really save as much as $100 by removing the $30 drive, and will gamers want to save $100 buying the console only to spend that much extra a year on the more expensive games?

TO bad we had the internet back lash on improving DD.

Rangers

Kinect 2 is supposed to retail for as Phil Spencer tweeted "not exactly $100". So this basically means $129 or $149. Old Kinect retails for $109.

So yes, it has some significant, $50-$75+ BOM.

Also about iSuppli, I dont trust their figures. A internal PSU is by (almost) all measures superior to an external. I still remember Kutaragi being asked if Ps3 has internal or a brick before PS3 was released. He asked the reporter "which is better?" The reporter said internal. And Kutaragi said so that will be what PS3 has. So why on earth would MS make an external brick, and cost themselves (supposedly) $5 per console in order to make an inferior product? That makes less than no sense.

The cost of Kinect 2 at retail doesn't factor into how much it costs MS to make. Because right now there is a $100 difference between the bundled and non bundle prices of the xbox one. If Kinect cost $50 bucks at retail who would pay for the $100 bundle ? At the same time charging more than the cost of the bundle will get more people to buy the all in one package

 

[Allandor]

they could remove the BR drive in future and sell a small external addon-drive for USB.
Well, at least the original plan von xb1 was to add a key with every game so the disc wasn't even needed for installation. so in time the BR drive would be obsolete.

This was (in my opinion) the coolest new feature of the new consoles, but we all know what happened.

 

[Shifty Geezer]

which goes with my point of a price drop not being indictive of how much something in the package costs...

A fair point, the price isn't indicative in itself. But when there are other pieces of evidence saying Kinect costs a lot, the weight of evidence is in favour. You never presented a strong case for Kinect being relatively cheap. Anyway, it's moot. Kinect's removal has already been applied. Cost reduction can focus on getting the Kinect-free SKU as cheap as possible.

$50 is not costly when it puts it under the chips and ram and not much more ahead of the optical drive

In a thread that's opening with suggestions of removing two buck connectors and the like, you reckon $50 isn't much??

You just have to wait on sales , I picked up plants vs zombies for $10 less than retail during a sale.

Stores have lots of buying options and sales (and physical has more functionality). That's why people don't buy download. Ergo, an optical-less console makes little sense.

TO bad we had the internet back lash on improving DD.

Irrelvant to the topic. How do we reduce the cost of XB1? Is removing optical drive an option (irrespective of reasons)?

 

[Rangers]

Presumably because it removes a fair amount of heat from the chassis and Microsoft's design is patently a product of risk averse thinking. How else do you explain the oversized chassis and enormous fan.

However the IHS estimates are the costs to each manufacturer. Sony's PSU is better than Microsoft's (it's a universal 50/60hz 110v to 240v unit) but the cost of building a PSU for Sony is going to be less than Microsoft because Sony source a lot of PSUs across a lot of products. Economies of scale will naturally favour the hardware company. I doubt there's any part of of the Xbox One that Sony couldn't have done cheaper.

The controller is the stand out but then the DualShock 4 has touch controls and a battery so it's not apples and oranges.

Seems dubious. PS3 didn't enjoy any price advantage over the equally powerful 360. In fact in general the Ps3 has even now remained probably street priced slightly more expensive. Yes there was Blu Ray but that disadvantage slimmed down over time.

Now a days all probably source from the same chinese mega-factories and little cost advantage can be gained I expect.

 

[function]

I vaguely remember MS engineers or PR mouths mentioning that the additional space afforded by the XB1 design gave them the needed headroom for the upclocks, and possible future ones as well.

The upclocks had nothing to do with a "big case", and MS engineers never claimed it was.

TO bad we had the internet back lash on improving DD.

We had no such thing, ever, at any point. Don't foul this thread with such false and clearly partisan claims.

 

[MrFox]

In order to provide a gain in sales, the parts removed must not reduce the value proposition. Or at least not reduce it more than the parts cost (which, admittedly, is subjective and depend on each gamer's perception). Removing bluray or the HDD doesn't make sense. Removing Kinect did because there were gamers waiting for that SKU. There are few, if any, gamers waiting for a $30 rebate on a bluray-less SKU, or an HDD-less SKU. Better focus on things that can reduce cost without any impact of the actual product.

Otherwise it's not a cost reduction, it's a gimped console like they did with the Arcade SKU, or the PSP-Go. Neither had any success in expanding the market.

Spoiler

It still feels like some people are stuck in 2006 Jonestown where bluray is supposedly the devil, because it's in the way of their favorite company's plans. I don't mind arguing about it again, but there's no reasonable argument against bluray in 2014. We talked about it in 2005 against hddvd, then also in 2006, 2008 and 2012 against multiple holodisk vaporware, then we were back at it in 2013 against online DRM. How about moving on?

 

[Deleted member 11852]

Seems dubious. PS3 didn't enjoy any price advantage over the equally powerful 360. In fact in general the Ps3 has even now remained probably street priced slightly more expensive.

Economies of scale is dubious? Really!?! You're denying economies of scale?

The PS3 simply includes more expensive technology than 360, particularly Cell and Blu-ray.

Economies of scale doesn't mean that expensive components become cheaper than less expensive components across the board, it means that by buying/producing more of something, it becomes cheaper to produce. Sony make a lot of hardware. In comparison, Microsoft do not.

Yes there was Blu Ray but that disadvantage slimmed down over time. Now a days all probably source from the same chinese mega-factories and little cost advantage can be gained I expect.

The consoles are made in China (PS4 was early on, and maybe still, is also made on Japan) but based on the year downs, don't contain a lot of honest tech. But these would depend on each companies deal with Foxconn.

I imagine that for Microsoft it would make sense to outsource much of the supply chain procurement to Foxconn. For Sony, I can imagine it would be more advantageous to supply Foxconn with some components from Sony's own supply chains.

 

[eastmen]

A fair point, the price isn't indicative in itself. But when there are other pieces of evidence saying Kinect costs a lot, the weight of evidence is in favour. You never presented a strong case for Kinect being relatively cheap. Anyway, it's moot. Kinect's removal has already been applied. Cost reduction can focus on getting the Kinect-free SKU as cheap as possible.

We've had debates about this. The Kinect has no moving parts , has cheap cameras even the ir blaster is cheap. The built it to cost a little as possible

In a thread that's opening with suggestions of removing two buck connectors and the like, you reckon $50 isn't much??

Compared to what others have estimated yes it is nothing. Its exactly half the cost of what people have been claiming

Stores have lots of buying options and sales (and physical has more functionality). That's why people don't buy download. Ergo, an optical-less console makes little sense.

No an optical-less Sony style system with ancient DRM makes little sense . What ms pitched last year DD made perfect sense

Irrelvant to the topic. How do we reduce the cost of XB1? Is removing optical drive an option (irrespective of reasons)?

Console's have since the launch of the ps1 been loss leaders. They made money back on games.

DD have a higher profit margin than Disc games. Thus removing the drive and going all digital not only removes the cost of the drive / larger casing / more expensive shipping and whatever else we can throw in that pot but it also increases revenue through higher profit per game.

 

[eastmen]

In order to provide a gain in sales, the parts removed must not reduce the value proposition. Or at least not reduce it more than the parts cost (which, admittedly, is subjective and depend on each gamer's perception). Removing bluray or the HDD doesn't make sense. Removing Kinect did because there were gamers waiting for that SKU. There are few, if any, gamers waiting for a $30 rebate on a bluray-less SKU, or an HDD-less SKU. Better focus on things that can reduce cost without any impact of the actual product.

Otherwise it's not a cost reduction, it's a gimped console like they did with the Arcade SKU, or the PSP-Go. Neither had any success in expanding the market.

Spoiler

It still feels like some people are stuck in 2006 Jonestown where bluray is supposedly the devil, because it's in the way of their favorite company's plans. I don't mind arguing about it again, but there's no reasonable argument against bluray in 2014. We talked about it in 2005 against hddvd, then also in 2006, 2008 and 2012 against multiple holodisk vaporware, then we were back at it in 2013 against online DRM. How about moving on?

People in general don't seem to want Blu-ray or even DVD anymore . between 2009 and 13 DVD/Bluray Rental/Sales dropped by $3B and they are expecting it to drop another $4B by 2018


http://www.theverge.com/2014/6/4/57...-will-make-more-money-than-box-office-by-2017

I have a little over a dozen blu-rays and I can buy a cheap $40 Blu-ray player that will play the titles as well as the ps4 and xbox one.

The only thing its doing on consoles right now is keeping the used market alive.

The reason many of us were against bluray is the speed.Its at 27MB/s on the ps4

HVD at the time was supposed to hit 3.9TB and start at 128MB/s transfer of course it seems like HVD is dead . Many people would have been happy because we could have had a decrease in actual disc size and there wouldn't have been a need for layers which slow down transfer and seek times.

With the 5 gigs of ram the current consoles have avalible a Blu-ray would fill it in 148 seconds and HVD at 31 seconds .

Even install times would have decreased. 50 gigs on Bluray would take 30 minutes on hvd 6.5 minutes.

OF course I would have loved Flash . Maybe next generation now that 3d nand is happening. We could see each game come in its own little ssd slightly larger than an SD card and transfer at hundreds of MB a second

 

[Shifty Geezer]

We've had debates about this.

This one. No conclusion, although the latest posts by MrFox and Grall went into some detail. They were looking at ~$50. Then we have iSuppli who's job it is to do this and who presumably have a lot of expertise who reckon $75. And of course MS saying the thing's really expensive. So iSuppli are wrong and Kinect2 is $35 and not much of a saving?

Compared to what others have estimated yes it is nothing. Its exactly half the cost of what people have been claiming

That's not the discussion! How to save money on XBox SKU. Suggestion - remove Kinect 2. What will that save? $100. Do it! $50? Do it! That's still a massive saving. If the cost of Kinect 2 was $5, then it could be argued that keeping it is worth the added cost, but at $50, or even $30, it's a significant cost to be considered as removable or not, exactly the same as deciding whether the BRD or HDD should go. For the sake of discussion, let's say Kinect 2 is a $30 device. That's still a massive saving worth hundred of millions of dollars. It's needs to be considered the same as any other large, expensive component.

The highest expense is SoC. That can't be removed, but can be shrunk
Then there's RAM. Can't be removed. How can it be cost reduced?
Then there's optical drive, HDD, and Kinect 2 (which may be more expensive than OD and HDD but let's pretend against evidence that it's on par). These are all optional as a change in experience can accommodate their removal.
Then there's all the other fiddly bits and pieces, which is more what this thread is about!

No an optical-less Sony style system with ancient DRM makes little sense . What ms pitched last year DD made perfect sense

Going off topic. The option is to remove the optical drive from XB1 is on the table. If done, it'll remove ~$30 from the BOM, but also materially change the experience. Would that be a valid move? The market as is, regardless of what might have been, says no. Only 15% of people are buying EA's games as downloads instead of as discs. So you'd have to change the level of interest in a download only console before you roll one out. When downloads are at 50% or whatever, an optical less option would make sense. If MS update their online policies and can get people downloading games, they'll enable this option. As is, removing the optical drive isn't a realistic option for a mainstream console. I suppose MS could try a niche console, but there'll be overheads in running a second model that may mitigate savings, although it might widen their market a little.

Console's have since the launch of the ps1 been loss leaders. They made money back on games.

With that model, many consoles have lost their companies money and eventually bankrupted them. It's not a model anyone likes and not one that any company has set out to do this generation.

Yusuf Mehdi on XB1

Microsoft's Yusuf Mehdi has revealed that each sale of an Xbox One will be a break even transaction for Microsoft at the very least, suggesting that the machine is to be sold at profit from day one - a feat normally reserved for Nintendo.

Kaz Hirai on PS4

From a profitability perspective, PS4 is also already contributing profit on a hardware unit basis, establishing a very different business framework from that of previous platform businesses."

Your argument is basically a business one, saying MS can just take a loss on the hardware. This thread is supposed to be a technical discussion on the ways MS can reduce the BOM.

 

[taisui]

The consoles are made in China (PS4 was early on, and maybe still, is also made on Japan) but based on the year downs, don't contain a lot of honest tech. But these would depend on each companies deal with Foxconn.

Just pointing out that Brazil is making the X1 as well, and Foxconn did not land much of the order either.

Historically, PS1/2/3 and 360 all went through multiple revisions, even the Wii, the question is not so much if, it's more on the when and how, and usually it comes down to the improvement of the CPU/GPU process with some minor tweaks here and there.

 

[JPT]

My experience with "Made in Brazil", was done, because you got some tax deduction that made the products cheaper to sell locally. Basically for the company I used to work for, they sent a mainboard and the housing to Brazil from China/Taiwan and it got assembled locally. It was enough to get the tax deduction and the labour was cheap enough to warrant the setup.

 

[Gubbi]

DRAM prices has been rising the past two years, from around $3.5 / GB to $9 / GB. The price has now retreated again to around $7-7.5/GB

We're entering another bust interval in the eternal DRAM bust-boom cycle. All the three major DRAM producers have vastly increased capex this year compared to the two previous years. That means process gains and/or more capacity.

This will drive down the price of DRAM again. DDR3 is likely to be more sensitive to price erosion than GDDR5 because competition here is fiercer, but we will know in a years time.

I wouldn't be surprised if MS knocked $40 off the BOM on DRAM alone within the next 18 months.

Cheers

 

[eastmen]

This one. No conclusion, although the latest posts by MrFox and Grall went into some detail. They were looking at ~$50. Then we have iSuppli who's job it is to do this and who presumably have a lot of expertise who reckon $75. And of course MS saying the thing's really expensive. So iSuppli are wrong and Kinect2 is $35 and not much of a saving?

That's not the discussion! How to save money on XBox SKU. Suggestion - remove Kinect 2. What will that save? $100. Do it! $50? Do it! That's still a massive saving. If the cost of Kinect 2 was $5, then it could be argued that keeping it is worth the added cost, but at $50, or even $30, it's a significant cost to be considered as removable or not, exactly the same as deciding whether the BRD or HDD should go. For the sake of discussion, let's say Kinect 2 is a $30 device. That's still a massive saving worth hundred of millions of dollars. It's needs to be considered the same as any other large, expensive component.

The highest expense is SoC. That can't be removed, but can be shrunk
Then there's RAM. Can't be removed. How can it be cost reduced?
Then there's optical drive, HDD, and Kinect 2 (which may be more expensive than OD and HDD but let's pretend against evidence that it's on par). These are all optional as a change in experience can accommodate their removal.
Then there's all the other fiddly bits and pieces, which is more what this thread is about!

Going off topic. The option is to remove the optical drive from XB1 is on the table. If done, it'll remove ~$30 from the BOM, but also materially change the experience. Would that be a valid move? The market as is, regardless of what might have been, says no. Only 15% of people are buying EA's games as downloads instead of as discs. So you'd have to change the level of interest in a download only console before you roll one out. When downloads are at 50% or whatever, an optical less option would make sense. If MS update their online policies and can get people downloading games, they'll enable this option. As is, removing the optical drive isn't a realistic option for a mainstream console. I suppose MS could try a niche console, but there'll be overheads in running a second model that may mitigate savings, although it might widen their market a little.

With that model, many consoles have lost their companies money and eventually bankrupted them. It's not a model anyone likes and not one that any company has set out to do this generation.

Yusuf Mehdi on XB1
Kaz Hirai on PS4
Your argument is basically a business one, saying MS can just take a loss on the hardware. This thread is supposed to be a technical discussion on the ways MS can reduce the BOM.

There are two sides to every choice. People suggested removing a 1 dollar part and people then explained how the tv features would be a net positive at that $1 cost.

I have done the same. Removing Kinect already happened and MS is sitting at $400 . Do you have any links showing that MS is making a profit on $400 xbox ones ? You posted that they were breaking even or profiting at launch at $500 .

Removing the bluray player is more than the sum of its cost inside the package. Doing so effects the whole machine both in design choices and in the average profit per game sale.

 

[Gubbi]

As for the switch from DDR3 to DDR4, once it starts rolling the change will happen in 18 months, just like the DDR2->3 transition.

There are considerable power savings to be had with DDR4, so I'd expect mobile to be first to utilize it. When the number of dies produced are high enough for economies of scale to kick in, the rest of the market will follow in 6-9 months.

Cheers

 

[eastmen]

As for the switch from DDR3 to DDR4, once it starts rolling the change will happen in 18 months, just like the DDR2->3 transition.

There are considerable power savings to be had with DDR4, so I'd expect mobile to be first to utilize it. When the number of dies produced are high enough for economies of scale to kick in, the rest of the market will follow in 6-9 months.

Cheers

doesn't intel have a 6 and 8 core high end cpu coming out that exclusively uses ddr 4 later this summer ? The X99 platform I think

 

[Rurouni]

It should possible to make BR-less X1 if they make an external BR drive. Since all games need to be installed, even the connection type wouldn't really matter. They could sell external USB3 BR drive and make more profit from it. The biggest problem that I see with BR-less X1 is people ignorance of it, meaning that some people might be buying X1 disc for use with the BR-less and complain that their console can't use it.

 

[Silent_Buddha]

DRAM prices has been rising the past two years, from around $3.5 / GB to $9 / GB. The price has now retreated again to around $7-7.5/GB

We're entering another bust interval in the eternal DRAM bust-boom cycle. All the three major DRAM producers have vastly increased capex this year compared to the two previous years. That means process gains and/or more capacity.

This will drive down the price of DRAM again. DDR3 is likely to be more sensitive to price erosion than GDDR5 because competition here is fiercer, but we will know in a years time.

I wouldn't be surprised if MS knocked $40 off the BOM on DRAM alone within the next 18 months.

Cheers

This is going to be an interesting next few months. Will have to see if the memory makers continue with increased production or if they'll stifle it at some point in order to artificially keep prices high. It'll all depend on how competition plays out between the various memory manufacturers and which how low they are willing to go (in price) before doing something to keep prices stable.

Myself, I was lucky enough to buy 32 GB (4x8 GB sticks) of high speed DDR3 for my current rig for ~100 USD just one month before the market crashed hard. I was personally expecting the market to recover faster than it has, but that hasn't happened. I figured it was a case of memory manufacturer's wanting a higher margin and thus weren't ramping up production aggressively.

Perhaps they were expecting the PC industry to transition to DDR4 sooner than it has, but demand for DDR4 in the past year has been tepid at best. So perhaps the transition they were expecting never happened and thus we were all stuck in a no-mans land where the manufacturers didn't want to invest in increased DDR3 production when they were hoping/expecting DDR4 adoption to start sometime last year. Only that adoption never manifested itself as both AMD and Intel were happy to stick with DDR3 due to the relatively soft PC market at the time as well as DDR3 being "fast enough" for the time being.

This is encouraging news.

Regards,
SB

 

[function]

Yeah, I was looking at a DDR4 roadmap from 2010 earlier today. By now the market was 'supposed' to have transitioned to DDR4, with speeds as high as DDR4 4266 entering the market in 2015 ...

*If* MS could switch to DDR4 4266, then 4 x 2GB chips would allow them to meet Xbone's memory needs. At that point, once that's mainstream memory (2017?) they might be able to produce their console very much more cheaply than today and with a substantially smaller and simpler motherboard.