Top
380°

The Estimated Material Cost Of Kinect: $56 USD

TechInsights, a division of United Business Media, has completed a 'teardown' analysis of Microsoft's motion-gaming Kinect device and estimates that the material cost of the device is around $56.00 USD.

Interestingly, TechInsights also found that the Kinect does in fact contain a standalone processor. This component was often rumoured to have been removed in order to save on production costs.

Read Full Story >>
incgamers.com
The story is too old to be commented.
MariaHelFutura2833d ago

Which ironically is about exactly how much it should cost to buy.

Kran2833d ago

Agreed.

But when theres money involved, Microsoft are willing to double it. I mean my mothers got me Kinect for Christmas, but heck she coulda got me atleast 3 kinect games with the extra £80 they charged

gamingdroid2833d ago (Edited 2833d ago )

I never really cared about what the manufacturer pays for the product it intends to profit from me. If so, I would have complained just about any brand name product out there including iPhones, Coach Handbags, and so on.

It is what is provided to me in value i.e. if the profit margin is slim, but provides little value then I don't give two hots! If it has a 99% profit margin, but provides me a better value, I will take that.

With that said, the BOM excludes a lot of other things going into research, warranty claims, marketing, management and so on.

Did you know most products in a retail store has a 40% profit margin?

Electronics is the exception to this and has pretty much a razor thin profit margin. Coach handbags on the other hand, probably has a a few hundred percent profit margin!

Nitrowolf22833d ago (Edited 2833d ago )

wait, i just learned this in marketing class, but isn't the $150 actually the mark up cost retails put on? meaning MS sells these for a lot less to retailers just like any other company with their product, but the retailer need to have a way to make money up, so what ever price MS agreed for them to post it at the cost they paid to buy is what the retails get. So really MS only sells these around $100 or something like that. IDK someone correct me if that applies with gaming consoles. Because Retailers need to make money some how off them, So people saying that it should only cost $56 are insane if that is what they are coming up here, because no one will make money (which is why the price is high)

@Omega

If my statement is correct (and what gamingdroid) then MS doesn't get all that money, the only money they get is what they have sold to the retailers. Unless all these stores are owned by MS, then they don't make that much ($100) on each Kinect.

N4WAH2833d ago (Edited 2833d ago )

Nearly every perphial / add on MS sells is grossly over priced.

RBlaze2833d ago (Edited 2833d ago )

So many other things are factored in to the cost of production... It isn't just the parts, it's other stuff too.

And MS then sell it to the 'middlemen' who need to take their cut. As with almost all business.

And yes, most items hit retail at a large profit margin... That is certain... Do you really think it costs £45.00 to make an Abercrombie and Fitch shirt so they can sell it in the UK for £50?! Even though the same thing goes for $50 in the US?!

But, all that considered, you will all be aware that when a new console is released, the manufacturer usually sells it at a loss (after all costs considered). They make their money back on other items.. Then after a period of time, the price of building the console drops off and they can start making money per console.

That is what confuses me over this so much. MS is sort of marketing Kinect as if it is a new console.. So surely the best way to do that is to shift the 'console' to as many people as possible... So why are they trying to grab a real profit margin from it?

Dlacy13g2833d ago

You raise a great question about why MS would be charging what they are and looking to make a profit when most practical thinking would be to release it at a lose to ensure install base.

The answer is two fold really. One MS realized through many consumer studies that this device was going to have appeal to the casual gamer and a price point (bundle) of $300 or under for a console set up is not too high.

The second point and I believe the biggest factor for their decision....the competitions price point. MS let Sony make the first "move" on price for their add-on. $100 for the wand bundle but you really needed at least one more wand / subcontroller for almost every game...that raised that cost to $150 or more... The Wii still had the $200 price point but its sales were declining. So coming in at $150 stand alone or $300 bundled for what they saw as a "unique" experience was right in the wheel house.

gamingdroid2833d ago

"That is what confuses me over this so much. MS is sort of marketing Kinect as if it is a new console.. So surely the best way to do that is to shift the 'console' to as many people as possible... So why are they trying to grab a real profit margin from it?"

It's very simple, casual gamers don't run out and buy software like hardcore gamers do. They are much more price sensitive, buy less and use it less. Thus grabbing an upfront profit makes sense and gives you room to drop the price if competition heats up.

In addition, MS seems to have tested the market for the $150 price point and found people are still buying it. Remember when MS vehemently denied the price, yet retailers were allowing pre-orders for $150. MS was certainly testing market reception at that price point.

Remember it is easy to drop the price on a product, but almost impossible to raise it!

EVILDEAD3602833d ago

If that's what it costs then it smart..

People pretend that gaming companies should price their products at a loss..

The fact is if it costs 56 dollars and the consumers gets a pack-in game then it matches what Wii and Move are doing to make profit..

The haters hate when Microsft makes money, but are quick to laugh at them if they are not successful when the quarterly reports come..

Evil

catguykyou2833d ago

"That is what confuses me over this so much. MS is sort of marketing Kinect as if it is a new console.. So surely the best way to do that is to shift the 'console' to as many people as possible... So why are they trying to grab a real profit margin from it?"

Because that is what the Wii did and it worked well. Normally companies in the gaming industry sells the hardware for a loss and makes up the money from software. Wii has always sold for a profit and Nintendo did very well. Now every company is going for that same strat. Motion controls, sell hardware for a profit.

RBlaze2833d ago

That's my bad, mate...

I actually didn't know the Wii was always sold at a profit!

KingME2832d ago

That means Move probably cost about 8-10 dollars to make.

REALgamer2832d ago

Another example is the Google Nexus One phone, sold for $529 on launch cost an estimated $175 in parts.

Anyone who thinks a product should be sold for its material cost hasn't thought it through. The material costs are only the beginning. The costs that push the retail price up:

- Research and development. It doesn't invent itself.
- Employee salaries
- Shipping
- Marketing
- Actual factory / manufacturing costs
- Retail mark-up needed for the stores to make a profit

The materials and parts are only the absolute base costs.

The only way it could be sold for $56 is by pretending no humans were employed to design it, the factories magically appear out of nowhere to produce it, the marketing is totally free, it's teleported to all the countries around the world and retailers are happy to waste stock space and sell it for no profit.

baodeus2832d ago

@realgamer

Exactly, couldn't agree more. I guess many people here just got their gaming out of no where, poof , there it is, magically happen (like parent bought it for them and santa clause do exist).

Masterchef20072832d ago

What you said makes perfect sense i never thought of it that way. Thats probably why its 150 dollars. Retailers buy it wholesale at a reduced price and then they slap the 150 MSRP on it makes sense actually

Hideo_Kojima2832d ago (Edited 2832d ago )

Firstly where do you think the half a billion advertising budget is going to come from?

Secondly they charge as much as they think people would pay not as much as its worth.

Thirdly I think Kinect is mostly software...
The Natal project was probably all about writing the code to identify different body parts and track them through the 3 receptors... I doubt they spend much money researching on what hardware they would need to use.

The hardware is pretty cheap its not like they have a HD camera in that thing or even a processor.

+ Show (11) more repliesLast reply 2832d ago
Raikiri2833d ago

so it does have a standalone processor.

btw software has a price too.(to make it)

sdtarm2832d ago

LOL M$ ripping off a bunch of ignorants once again xD

gigaware2833d ago

I see you're busy with the trolling today.

MariaHelFutura2833d ago

Didn`t you know it`s pretend to be gigaware day.

gigaware2833d ago (Edited 2833d ago )

Spin it lol

Check out this person's history http://n4g.com/user/home/ma...

Pretty sad to see gamers so emotionally caught up in the console war they spend 24/7 trying to trash the competing product. When in the history of gaming has their been such a 3rd place mindset towards the more successful product?

All this Pro PS3 crap on this site means jack

MariaHelFutura2833d ago

LOL, I own a 360. I enjoy my PS3 more. Because I like their 1st party stuff. I don`t find anything interesting for Kinect besides Children Of Eden.

You so blinded by fanboyism. It`s not even funny. Plus, stop following me around I got enough groupies as is.

Motorola2832d ago

Have you seen your OWN post history??? @gigaware

+ Show (3) more repliesLast reply 2832d ago
Nariko-20112833d ago

I get what you were trying to say there but bad choice of word there. Dictionary...be friends with it

MariaHelFutura2833d ago

"coincidental; unexpected: It was ironic that I was seated next to my ex-husband at the dinner."

OldParr2833d ago

what about the engineering part and research?? what about making a profit out of it??? when you open your own business, you'll realize all these things, well if you ever do. and then, MS won't be such a bad guy after all..uh?

The real killer2833d ago

Yoe mean, buy the tech. They buy a Isreal tech company for kinect and that money must paid back by cunsumer.

jarrod19812832d ago

people must be retarded. it cost them $56 in parts so apparently some people act like it should be sold for $56. asides from r&d and all that, they are selling it to middlemen and they obviously have to make money or whats the point and then the middlemen turn around and sell it to the public and they have to make money so it isnt unreasonable to pay 149. its business. do people really not understand this.

arragionthegreat2833d ago (Edited 2833d ago )

I might get it @that price,..
Actually I think because of it inherent usability flaws,.. It should be cheaper, than the sum of its parts,..Now that is plain retarded,..What were they thinking,.. It is like putting a mobile phone into the toilet seat,..

Shadow Flare2833d ago

360 owners must have an ass that looks like the Japanese flag with all the bending over they've been doing

morkendo232833d ago

and MS want to charge 150.00??? it should cost 65.00 no lest.

T9X692833d ago

Yea and video games cost no more than $3 to print and package and everyone charges $60, which is 20x more the price of production.

DigitalRaptor2832d ago

And it's pretty obvious that the game's value is worth much more than $3. It's an industry standard.

For something that has been proven to be worth ~$56, and it still has many active flaws, that's what it should cost, not over double that price.

rexus123452833d ago

$56 is the cost of material, there is a lot of overhead such as packaging/transportation/labor /retailer's cut/etc. I wouldn't be surprised if they all adds up to exactly $150.

Dlacy13g2833d ago

MS did go on record saying they were selling Kinect at a profit. How much is up for debate.

T9X692833d ago (Edited 2833d ago )

"MS did go on record saying they were selling Kinect at a profit"

That's kind of the whole point of selling something.....

EDIT: True, but you have to look at the competition as well, Kinect can support two players at once as well as up to 6 players in one game, and set at $150 packed with a game. Since Move just launched it's priced at $100 for 1 player packed with a game, if you wish to play 2 players at the same time you will need to spend another $50 for another Move controller and another $30-$50 if you didn't already on another DS3 or the navigation controller, which is more than what Kinect is priced at. Kinect is advertised as a family gaming platform so your whole family can jump in and play, you don't need to buy anything extra if you want your family to play, just more games if you want them. Where if a family wanted to play Move, they would spend well over $150 for the same amount of players.

For a family product and the current competition the price is fine, but if you want Kinect just for yourself and only plan to play by yourself, then yes it is a little high.

Dlacy13g2833d ago

Certainly it is...HOWEVER when you typically are launching a new console (and many would say Kinect is infact a new platform for MS) you do so at a loss to keep the price point low. Low price points will help get lots of early adoptors, which will build the install base. Which in turn will incentivize publishers to make games because they will have an audience to sell to.

If nobody buys Kinect there will be about ZERO publishers wanting to make games for it. So it was a bit of a risky move to launch it at a profit.

It just goes to show you how confident MS was they Kinect would sell.

EasilyTheBest2833d ago (Edited 2833d ago )

Is it safe to step in?

Kinect in the UK £129. For me it was a great price worth every penny and all my family have really enjoyed it.

You can pay more for a pair of Jeans, how much are they costing to make.

Iphones? £400+

I bought a second hand pram at a bootsale. It cost me £10. I gave it a 10 minute clean and sold it for £140.

I bought 200 dvds for £200, I sold the 200 dvds all in one go for £500.

My mum bought out house for £550. She gave it to me. Years later I sold it for £165000!

Microsoft, why do everyone hate you more than any other company just because you make money.

Jeremy Gerard2832d ago

They did one on Move too, and from the looks of it, the parts in it are worth about 5 bux.

Besides, these are only materials costs, not production costs which are usually far higher.

internalbit2832d ago

Sell price $149, cost to make $56, profit $93. Cost of marketing $500 million.

$500million divide by $93 = approximately 5.5 million.

Lol 5.5 million units of kinetic need to be sold before M$ even sees a cent of profit.

So who is making money of motion control ? Sony and nintendo.

+ Show (9) more repliesLast reply 2832d ago
Omega42833d ago

Well MS won't have any trouble making that $500ml back. Also gives hope to those people who want it when the price drops which will obviously happen at some point.

Shok2833d ago (Edited 2833d ago )

Wow, you just try to see that light in every Microsoft-related situation don't you? WHO CARES if MS won't have trouble making that $500mil back!? WE'RE THE GAMERS, not the company!! You shouldn't care about that.

Seriously, you have a mental illness, I can tell. I've studied many psychological symptoms and you definitely have some.

Raikiri2833d ago (Edited 2833d ago )

uhmm.. we should care

No money = no games.

No games = No console.

No Consoles = no company.

no company = no gamers.

We shouldn't care too much, but we should at least care a little

Nariko-20112833d ago

Dear doctor, I'm a dual console owner and I like both consoles but lately I find I can't express my joy at owning kinect without fear that ps3 fanboys like yourself will attack me for it. I need your advice, please tell me why the hell ps3 fanboys claim they do not care about kinect and yet they are in EVERY SINGLE FREAKING ARTICLE insulting the people that do like it?
Yours truly Nariko...recent owner of a kinect 250gb bundle

Shok2833d ago (Edited 2833d ago )

@ Raikiri

Dude, Microsoft isn't going to go bankrupt anytime soon. I can understand concern for small 3rd party devs, but seriously, do we really have to worry about Sony nintendo and Microsoft losing money? No, we don't.

I swear people be actin like their Microsoft stockholders. Instead of hoping they make their money back, you should be hoping for some exclusives.

@Nariko-2011

Dear Nariko,
Please, tell me what it was in my post that indicated that I was a PS3 fanboy. Thank you.

Nariko-20112833d ago

Move is obviously the better
option for motion-control gaming,
but seriously, and this is coming
from a PS3 supporter, Kinect is going
to outsell Move. The typical casual
gamer simply isn't informed enough
and will see Kinect as God in
technology form. #12
19h ago by Shok | View
I really don't see why people
see Kinect as something that is new
and revolutionary. It's not a new
concept, and it's hardly advance
technology. I don't see how a
company can come out with such an
obvious rip-off of something else
and have everybody raving over it.

Shadow Flare2833d ago

Wow raikiri, your comment failed on it's very first point

"No money = no games"

Microsoft has money. A hell of a lot of money. Which makes your entire point, pointless.

If you feel fine paying $150 for a $50 camera, then I'm not going to lose sleep on that. And I'm sure you'll sleep easy too knowing Microsoft is making lots of money. By raping you.

Shoko2833d ago (Edited 2833d ago )

1) Hm, so if I ever talk down on Microsoft,or the 360 fanboys, that automatically makes me a PS3 fanboy? I can't be a Wii fanboy? How bout PC? I can't be a gamer that just doesn't like M$ and it's fanbase?

2) I clearly said what did I say in THAT PARTICULAR post that indicated that I was a PS3 fanboy, not every post I ever made. Lol.

3)Name one thing I said that was wrong in all of those posts. Betcha can't lol.

4) I never really talked down on the 360 itself. I never said it was a bad system, or that it sucks, or anything along those lines. All I did was talk about M$, 360 FANBOYS, and Kinect. Not once did I actually diss the 360.

5) You lost. Face it.

+ Show (3) more repliesLast reply 2833d ago
OldParr2833d ago

when it comes to tech, price will always drop. I don't see your point!

kneon2833d ago (Edited 2833d ago )

They will need to sell a lot to make back $500,000,000. The $56 is just the BOM, you need to add in all the additional costs like assembly, packaging, shipping, research etc. At $150 each they will be lucky to pocket $20-30 per unit. Even if they sell 10,000,000 that puts the marketing costs as a whopping $50/unit!!

Most of the ROI will come from the software sales, not from the hardware, software has much better margins.

Shok2833d ago

Typical of Microsoft. It's the same situation with the $100 wi-fi routers they were selling. Complete rip-off.

dirthurts2833d ago

It's the same price as the move...and people are buying them. It's not really a ripoff if people are willingly paying for it.

saint_john_paul_ii2833d ago

so people are pretty much paying microsoft an extra $100 as a marketing fee?

xg-ei8ht2833d ago

No console - no company?

ROFL.

It's not like.

No chicken - No egg.

Microshaft will always be around, in one way or another.