News
Microsoft loses $126 per 360 sold |
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| Posted by: | Luke | Date added: | 11.23.05 |
| Categories: | [ General Xbox 360 ] | ||
| News: | |||
| We've heard it all before - big coroprations like Microsoft and Sony lose money on selling consoles, but make money selling stuff to go with it - ie. games, accessories, and the rest. But just how much are MS losing per sale of an Xbox 360 console, and when will they begin to turn a profit? BusinessWeek have some clues. 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. That was the case with the first Xbox console, which contained about $323 worth of parts and materials when released, but sold at retail for $299. It's certainly not going to help Microsoft reverse the trend of losses in its home-entertainment segment. In the fiscal year ended June 30, that unit lost $391 million on sales just shy of $3.25 billion. That's a little more than 8% of Microsoft's total sales of $39.8 billion. A Microsoft spokeswoman said that the company's plan calls for a "gross margin neutral" strategy through 2006, meaning that between the sales of consoles, game software, and accessories, it expects to essentially break even. Profits should follow in 2007. | |||
| Networked Items: (1) | - Xbox 360 Premium |
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