is Microsoft losing or gaining money on the xbox one?

#11dnmtPosted 5/6/2014 3:49:23 AM
Kpt_Kapowski posted...
SoulTrapper posted...
They're losing money right now, there's no doubt about that.

It was estimated that every console cost MS $471.

http://venturebeat.com/2013/11/29/the-deanbeat-the-xbox-one-cost-471-to-make-the-ps4-costs-381-and-why-this-matters-in-the-long-run/


It's currently being sold at $450 along with 2 free games.


stop lying.


You did a really nice job refuting him there. Pfft, facts.
#12Styrof0amPosted 5/6/2014 3:50:46 AM
SoulTrapper posted...
http://venturebeat.com/2013/11/29/the-deanbeat-the-xbox-one-cost-471-to-make-the-ps4-costs-381-and-why-this-matters-in-the-long-run/


... But all this assumes MS pays retail for the parts, and sell it for $500 to retailers. AFAIK only retailers has dropped the price, as part of sales and specials. MS hasn't dropped the price permanently yet.

Aside from parts (most likely bought in bulk with a hefty discount, sans custom build SOCs), there's also the cost of production, distribution and advertising.

I have no idea what MS pays for each XB1 built, and I don't think anyone beside MS knows, and they've said ...

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 ...


Source: http://www.gamesindustry.biz/articles/2013-09-05-xbox-one-will-be-break-even-or-profit-making-from-launch

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#13Kpt_KapowskiPosted 5/6/2014 4:09:45 AM
dnmt posted...
Kpt_Kapowski posted...
SoulTrapper posted...
They're losing money right now, there's no doubt about that.

It was estimated that every console cost MS $471.

http://venturebeat.com/2013/11/29/the-deanbeat-the-xbox-one-cost-471-to-make-the-ps4-costs-381-and-why-this-matters-in-the-long-run/


It's currently being sold at $450 along with 2 free games.


stop lying.


You did a really nice job refuting him there. Pfft, facts.


http://www.google.com/search?q=how+much+does+the+xbox+one+cost%3F&oq=how&gs_l=mobile-heirloom-serp.1.0.41l3j0l2.2475.2938.0.5770.4.3.0.1.1.0.241.544.0j2j1.3.0....0...1c.1.34.mobile-heirloom-serp..0.4.577.bxd07SxRUik
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#14SabramPosted 5/6/2014 4:49:17 AM
the $450 sale was active even on the MS store, so they certainly were losing money on every console sold through there if indeed it cost $471 in parts and assembly.

Also MS has to pay EA for every copy of Titanfall bundled, since even with the $450 sale over the $500 bundle is still around, which means the game is free for consumers, but EA still wants their money from it. I believe the Titanfall bundle also comes with a month of Live as well, so that's a small amount with each one sold..

Time for some maths Eh?

Let's say the Xbone costs $471 to produce, during the month of March about 311k Xbones were sold. so 311k x 471 = 146,481,000. which is the cost for just the system at $500 which leaves that $29 as profit. So then 500 x 311k = 155,500,000 - 146,481,000 = 9,019,000 for profits. This would be at $500 per system

But since the system was $450 for all of March basically, that adds an additional $21 cost per system that isn't recouped since that's under the estimated production cost. Add in again the month of live (valued at about $5) and the copies of Titanfall bundled in (assume MS had to pay EA about $25 per copy) Then you're looking at $51 that MS is paying out during March per unit. so you take that $51 x 311k = 15,861,000 subtract that from normal profit stated above and you get... -$6,842,000.

So with those numbers, which may or may not be accurate (I have no idea of knowing) MS would have lost nearly $7mil in march on the Xbone. Now since the sale is over and the system is back to $500 it's a much lower cost, but for each Titanfall bundle sold that's 30$ spent vs 29$ profit, so MS would lose $1 per Titanfall bundle. Right now honestly no one should be buying the stand-alone system, since it's the same price but without the free game.

This of course factors in none of the front-loaded expenses such as R&D or companion costs like marketing, the actual cost MS paid to EA to make the game exclusive, or other associated costs, like the controller for the Titanfall bundle would cost more to produce than the standard one, even if only marginally.

So right now MS is losing a good chunk of change on the system trying to promote it. It doesnt really seem to be paying off as well as they'd hoped either. Hopefully the new Xbox head can turn things around and make the system more appealing to more people, but who can say at this point? I have seen articles where he's hyping the crap out of E3 and saying great things are to come, but the corporate views of MS have lately not aligned with the consumer's views on what is great.

Time will tell.
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#15bob15xPosted 5/6/2014 5:57:17 AM
471 cost in September when manufacturing them does not mean they are 471 in April-May.

Most likely its down to 420 or so.
#16SRBiasPosted 5/6/2014 6:39:30 AM
We are also forgetting the razor, razor blade aproach to this industry. Ryse, Forza 5, Lococycle. Any of the Microsoft ownef product that they attached to that system. We really don't know how much Microsoft paid for these parts. I know for one thing after the red ring fiasco Microsoft wants to make money on this unit.
#17Miiri0Posted 5/6/2014 6:44:58 AM
AwayFromHere posted...
Losing.


I cant imagine xbone is losing money because

Its a fact that xbone hardware us way inferior to ps4 and yet xbone is sold with much more expensive price tag. So $$$ for Microsoft.

Everything on xbone is pay walled. Even the browser, youtube and your already paid apps. So it really force xboners to shell out extra $$$ for Microsoft. Ka-ching $$$. Profit
#18Joey-ZazaPosted 5/6/2014 6:49:38 AM
There's no way in hell they are "selling" the X-box's to retailers for $500 you think that Walmart doesn't take a piece of the pie?

Microsoft is probably selling it to Walmart for $400 or less.
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#19kcypher2000Posted 5/6/2014 7:20:18 AM
Joey-Zaza posted...
There's no way in hell they are "selling" the X-box's to retailers for $500 you think that Walmart doesn't take a piece of the pie?

Microsoft is probably selling it to Walmart for $400 or less.


Wal mart pays less then $500 but their profit from electronics is minor. They probably pay like 480. Oh and ponies, 450 was a sale for one month. Move on. That was two months ago.

For tc the important thing is financials and Xbox division made $800 million last quarter in profits, meaning after costs. Most consoles lose money at first if not due to materials then due to overhead allocation.

Ps4 benefits with more sales by being in more countries but the overhead will be much higher.
#20EnclavePosted 5/6/2014 8:06:16 AM
Joey-Zaza posted...
There's no way in hell they are "selling" the X-box's to retailers for $500 you think that Walmart doesn't take a piece of the pie?

Microsoft is probably selling it to Walmart for $400 or less.


Mark up on video games and devices is usually around 10%. There's a good chance Walmart pays $450 per system. If the recent sale was mandated by Microsoft then I would probably expect them to do something like a $50 rebate for each console sold as well.
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