Microsoft makes a huge '$28' on each Xbox One – But, NOT REALLY

Technology market watcher IHS tore into the components of the new gaming machine, and – judging by the Xbox One's hardware and manufacturing costs – believes Microsoft is taking a hit on hardware sales in hope of revenues from licensed games and Live subscriptions.

This follows a time-honored tradition in the console market of selling games machines at a loss, simply to get as much gear as possible into homes, and then make back the money on royalties from third-party developers. It's claimed Sony makes "about $18" on each $400 PlayStation 4, for example.

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bicfitness1812d ago

Even if they took the Kinect (2) out, they still would be taking a loss if they matched Sony's price. With weaker hardware. My God, Redmond's Xbox division needs to be cleaned right out. Its an absolute abomination of a product. Strange thing is that they had this upcoming gen in the bag if only they'd released an actual 360 successor: well-specced hardware (no failures this time around, hopefully), streamlined Live (instead we have this party system that is literally a step back), and focused on gaming.

The geniuses at Redmond missed the mark on every one of these points. Every, single, one. Incredible.

DoctorJones1812d ago

How much is a ps4 with a camera?

djplonker1812d ago

I can get a ps4 and a camera for £370 the xbone is £429....

source: gamestop uk

ps4: £329.99

camera: £39.99

MizTv1812d ago

$459.99 in ma
That's without tax

XisThatKid1812d ago

U.S. About $493.90 here in New York

Docknoss1812d ago

And the Eye is the equivalent of the original kinect at best

Battlefieldlover1812d ago

I got it for 467 with no taxes and free shipping (amazon prime).

SilentNegotiator1812d ago (Edited 1812d ago )

Who cares? The PS4 camera isn't going to sell well anyway, since people actually have a choice.

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danny8181812d ago

they are professionals. I honestly think the xbox division rushed the xbox one to compete with the ps4... The xbox brand is probably gonna be sold. They dumoed so much on marketing and Microsoft doesn't care about the gamers so it wont hurt them to sell it off

Docknoss1812d ago

PlayStation will be sold off before the xbox brand, that's more fact than fiction.

dragon821812d ago

I wouldn't count on it. Sony has no plans to sell the PlayStation brand. There are execs at Microsoft who are already toying with the idea of selling off the Xbox division. I am not saying it will happen either way but I would lean towards Xbox being sold off long before PlayStation.

OrangePowerz1812d ago

MS with their new idea of delivering the same experience on every platform is questionable as well.

Metro UI being the prime example. The OS works on touch devices, it`s ok on the Xbox and horrible on desktop PCs, but they deployed it across all devices to have their vision of one UI for all devices.

Xbox was one if the few brands in recent history that was actually a success. Zune failed, Surface tablets aren`t doing that great and they had to make huge price cuts after they tried to get into the market for many years and the biggest selling point of Windows Phone is the camera from the Nokia smartphones.

How they managed to get from the 360 to the Xbox One is beyond me, but on the other hand the writing was on the wall. If you watched the E3 conferences for the last 3-4 years you have seen them mainly talk about media features and Kinect.

cell9891812d ago

greed is at the core of the xbone developement. Make a machine with as little money as possible, force Kinect so compensate in ads for a mass market

MizTv1812d ago

2006-2007 was the best time for 360
Since 2008 not so much...

YodaCracker1812d ago

You must have missed this year's E3 where they showed nothing but games, games, games, back-to-back, one after another.

And it's pretty clear how they got from the 360 to the Xbox One. For years, they had been adding more and more media features to the 360. The first Kinect was essentially an experiment. It was all building up to the Xbox One, where all these media and Kinect features are native to the console.

And it sure has been successful for them so far, considering they tied Sony for the fastest-selling console in the first 24 hours.

Fgfttfgff1811d ago

@YodaCracker you also forgot sony only released in North America. Micro$oft released in 13 countries.

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Godmars2901812d ago

It tries to do many things with game and TV, then has forced Kinect integration hampering it besides. And then on top of that they make the mistake of underestimating what does.

Strange world.

Blachek1812d ago

I think they will do just fine with this generation. In fact, I think Sony will do better in the long run with Microsofts direction.

Microsoft can expand it's customer base without cutting into hardcore gamers who prefer Sony while increasing the exposure to video games among people who otherwise may not get an opportunity or be initially interested.

SirBradders1812d ago (Edited 1812d ago )

See for me i would much prefer 5 devices that do something flawless then 1 device that does everything mediocre. My tv does what the xbox1 is already trying to do, voice controls are really not that much of an innovation and the ps4 is already supposedly more powerful.

Ultimately people buy a gaming console for gaming and for 20-30 years its been the same. I do honestly think that aint about to change either because times are getting harder and people don't wanna fork out extra to plug there already subscription based tv into an overlay which will then put that cost up.

So in answer to your post i think they're in a worse position this gen.

Playstationologist1812d ago

Exactly right. It amazes me just how bad they screwed up on every single thing, to the point that people like me are switching from 360 to ps4.

malokevi1812d ago

Here's a silly little question:

Who cares?!

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JessiePinkmanYo1812d ago

$28 times a million in its first day. That's not chump change.

stuna11812d ago

It is when you've spent Billions on advertising, Marketing, Researching and, Developing for that exact same product!

Rhomiel1812d ago

100 millions only on the new controller!!!

AndrewLB1811d ago

Microsoft is clearly in better financial shape.

OrangePowerz1812d ago

That doesn`t include shipping, the share retail takes and so on. So in the end they don`t make money on the console, but that`s usually the case as the real money comes from software sales and Xbox Live.

JessiePinkmanYo1812d ago

Oh I agree-the $28xa million sounds like a lot, but out of that, all the costs you guys mentioned, plus retailers take their bite as mentioned in the article.

nukeitall1812d ago

This is likely by far the least loss any console manufacturer has taken in across a generation.

Remember when the PS3 was reportedly loosing $200-300 per console sold, or that Xbox 360 was around $150-200?

Profit comes later when the platform is established. This is the same every generation.

KwietStorm1812d ago

Perspective, buddy. $28 mil is nothing.

AceBlazer131812d ago

Wonder how much those armored trucks and xbox tour took out of that 28 mil, let's not forget the 100 mil for the controller.Or xbox warehouse. That 28 mil beginning to look like chump change yet?

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Ko_Uraki1812d ago

For months I have read so called insiders talking about "imminent disaster" for Xbox One. I am seeing a successful launch of a very complex hardware. Can't understand the negativity

xHeavYx1812d ago ShowReplies(2)
OrangePowerz1812d ago

It might not be as successful as MS would have liked given you can go into a store and pick one up.

UnHoly_One1812d ago (Edited 1812d ago )

That's a crappy way to judge success.

If they had only produced 1 million consoles, and sold a million, then it would be a massively successful launch, right? Because you wouldn't be able to find one in a store??

And if the PS4 had 2 million consoles ready to go, but sold that same 1 million? Their launch would be a failure because there would consoles on shelves everywhere??

What an ignorant way to look at things.

OrangePowerz1812d ago (Edited 1812d ago )

I didn`t say it`s a failure and I didn`t say that it would be a huge success if you make 1 million consoles and sell all of them.

I simply said that MS would have liked it a bit more successful. If you launch a console you don`t want to see consoles sitting on shelves as simple as that, you want to sell all the units you shipped to retail.

If Sony would have shipped 2 million to retail and sold 1 million they would have wanted it to be more successful and sold all of them instead of having them sit on shelves.

Both companies run currently manufacturing at full capacity, so they keep making as many consoles as they possibly can right now. If your consoles stay on shelves you produce overhead that isn`t being sold. The more you make the more money you loose because at some point you will be left with the stock as retailers wouldn`t buy more if they don`t sell the stock they already have. And there is no point in producing the consoles for the next 12 months yet because in a short time they will have cheaper ways to produce new units compared to how much it will cost both now. So what you want is to sell as many as you can manufacture to have the overhead as small as possible.

Manic20141812d ago

Actually it was reported to be beyond MS expectation's, compared to Sony it may not be as good of a launch but the Launch is still a huge success selling over 1 mil in under 24hrs.

Ko_Uraki1812d ago

If you can find one, please tell me. My brother is going crazy for it. All the xbox ones are keep for Black Friday

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mrbojingles1812d ago

Everyone knows that retailers get like a 25% cut on the price of the console right? That's probably, assuming retailers took a bit less for MS, at least $50+. Not to mention Microsoft trying to make a profit on the hundreds of millions of R&D too. They likely sell it at a $50-$100 loss when all things are considered

djplonker1812d ago (Edited 1812d ago )

It isnt even close to 25% maybe 5% - 10% the place I got mine from cant even give reward points because they make so little already!

Manic20141812d ago (Edited 1812d ago )

Not even close, If you take a look at how much retailers are making a profit on the consoles for e.g. in the UK, it's close to £4 per unit. Then the retailers will claim 20% VAT. SO overall in the UK the retailers mainly make the profit by claiming back the VAT. Overall MS is Breaking even with each unit sold. Same goes with the PS4.

Edit: I know this since were i work we bought 100 units for each the PS4 and Xb1 from centersoft and Gem wholesale.

DomceM1812d ago ShowReplies(1)
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