I have a hard time believing that the RAM, CPU and Hardrive combined cost less than $30, let alone the rest of the hardware. Heck, I have doubts believing the CPU, HD and DVD are less than that by themselves.
This sounds consistent with that I’ve heard - that the main reason Microsoft loses money on X-boxes is because it’s built almost entierly of off-the-shelf purchased components, while the PS2 is based around custom designed chips manufactured in-house. I also have a real hard time buying that Microsoft’s total cost on the X-box is $30 - if that was the case, they could price them at $60, put the PS-2 and the gamecube both out of business, and still make a 100% profit.
For $200, I can take that.
(It is disappointing news, though. When oh when will someone produce a good Mechwarrior game? MW 4 is so damned shallow.)
Some relevant information:[ul][]Sony sources about 250 billion yen a year from Taiwan alone; of the more than 500 components in Sony EMCS’ list, many are for the PS2[]Toshiba makes the Emotion video chip used in PS2.A fab plant is at least $100 million (IBM is dropping $3 billion on the plant that will make the video chip for the PS3).[/ul]
When calculating the cost of an XboX for Microsoft it isn’t accurate to only count the production cost. Considering that into that price you have to include marketing, development, distrobution, marketing, support, marketing etc. it is still very feasable for them to be selling them at a loss.
You don’t think you could get 200,000 unlicensed dvd drives for $30 each? Hell, I can go to Wal-Mart and get a full on home DVD player for $59 right now.
Perhaps they are manufactured for $30? There’s no way the nuts and bolts of an X-box cost $30, even in economies of scale. If it really cost only that much, MS would have launched the thing at $100 or maybe even $50 so they could compete with Sony (who, in terms of market share, has already won this round of the console wars).
Video game consoles don’t make money for quite a long time after their launch. Video games make tons of money right off the bat because it costs next to nothing to press and packages games and they sell for $50.
Only the Saturn, Dreamcast, and Xbox have been loss leaders.
I plan on buying an XBox and that game soon as I can…thats after I buy a car…and a get a place to stay…and a better computer…and a laptop…and a sell phone… and a satelite high speed internet sat dish…
Heck, id buy it just for the controller, if only to use it for my comp…
oh yah and: “Only the Saturn, Dreamcast, and Xbox have been loss leaders.”
Does anyone remeber the N64? Or the Nin Gamecube? The N64 was a MUCH better system then the ones out at the time, it was hurt by lack of game developers b/c its SOO much cheaper to make CDROMS than cartriges…And I KNOW the graphics for N64 seemed like they werent that great but thats from 2 reasons: Shoddy development co.s and developers spending too much time on the sound…(all the games I played had really great sound but terrible graphics) True, I never woulda bought one because of the lack of good games (rpgs) and because SquareSoft announced they weren’t going to develop for it. (Someone gave me one they thought was broken at a party, it was only missing a RAM chip) If they would had a dvdrom in addition to the cartridge, or even a cdrom add-on, they would have done much better…I even emailed them with that suggestion when I first found out about it, about 6months before it hit the stores, they responded with 'we’re going to release a Dvd-Rom addon eventually…
Sorry for rambling…
-Blah
Mr2001… USA Today disagrees with “Act of Gord”.
The article was written back just before the PS2 was released in the US.
The X-Box price point was deliberately set up to be sold at a loss. Even when Microsoft dropped the price again, they knew full well that the loss on each unit sold would increase.
The point was to undercut the competition, build market share and user loyalty (read that as sucker in the gamers).
Then the “real” games would be introduced at much higher price points than the first games. With the average X-Box gamer already owning several games and hooked on the “quality” graphics, it made no sense for those gamers to look elsewhere for other products, or abandon using X-Box altogether. So to make their initial investment in X-Box worthwhile, gamers now have to ante up for the higher-priced games. This is where Microsoft recoups its earlier losses, and then some.
It’s called “after market” sales. That’s where the real profits cut in. Microsoft is counting on the naivety of gamers and basic sleight-of-hand selling techniques.
My cites? I recall several news stories about this when M$ dropped the price of X-Box but I can’t find them now. Then again, the rest comes from training and experience in selling, above board, below the belt, etc.
I have no idea what the actual break-down cost of an X-Box is, nor who pays for what. What I do know is that they’re built in Mexico by $4/hour labor and our facility manager (who’s been with the company for years and has worked in some of our overseas operations) stated that our cost was $30. Does that mean just the labor and not the parts? I don’t know, but I can’t imagine that it’d cost $30 at $4/hour to put one togther.
Well, I would like to know whether that $30 is right. Be sure & ask the plant manager about this & how he got that figure. THat would be about right for labor per unit, when you consider assembling it, packaging & shipping, etc.
Well you have equipment with a finite life span so that must be amoratized. over the life of the equipment. There is the cost of keeping the factory maintained and powered. The inventory does not keep track of itself. At my old place of business The manufacturing over head was about 120%. So it is really about $8 or $9 an hour to assemble the boxes.
Point taken. As an excuse, I was thinking in Can $$, but you still have a good point. I actually thought about that just after I hit <send>.
IMHO, even with mass-production Economics, an Intel Pentium 3 733, 10GB (or whatever) HD, DVD-ROM, 64MB RAM would be virtually impossible for $30.
This is even before any of the other custom chips and casing, power supply, etc.
Maybe the $30 is the assembly cost, IE - Labor? The process of just putting it all together?
I dunno.
[hijack]
Try Mechwarrior 3. Extremely simmy – my favorite thing from it that they dropped from Mech 4 is independant targeting with the arms – otherwise having guns mounted on arms makes no real sense.
Why were the graphics terrible and why were there no RPGs? Lack of memory. A 100 megabit cartridge (12 MB) is peanuts compared to a 650 MB CD-ROM.
When the N64 was competing with the Saturn and PSX, Nintendo ran snotty magazine ads about the supposed advantages of cartridges over CD-ROMs. “You can’t scratch a cartridge! You don’t have to wait for it to load!” Yeah, but you can’t have CD-quality music, full motion video, or high-res textures either.
Look at Final Fantasy 7 on PlayStation - a perfect example of the advantages of CD-ROM. The 3D graphics and sound were nothing special, but FF7 lit a fire under PlayStation sales because of the high-res backgrounds, full motion video, and the ability to store enough locations and plot for 60 hours of gameplay.
Those are estimates, not actual figures. Sony has said they’re making a profit on the PS2 and I have no reason to doubt them.
I wonder if the analysts’ figures include the cost of the fabrication plant - i.e. the parts and labor don’t cost more than $400, but the factory to make the parts cost $2 billion, which drives the per-unit cost past $400 if you spread it out to each unit. In any case, they’ve already made back the money they spent on the plant.
Mr2001:
True, True…but I would still sacrifice that little bit O graphics for that extra load time…multiply that load time with the amount of times it hits and you get an impressive figure…(in the tens of hours…What can I say, I have no patience…)
Um YES you can have…I completely forgot, but it was a very important point…time to sleep…havent slept in 72+ hours…
-Blah
Insominia S%cks…
I have no idea if they are now. Like I said, that article was from two years ago.
That could be problematic as I rarely see the plant manager and I wasn’t supposed to hear the conversation that had him stating the $30 price for X-Boxes. (Long story.)