There Are No Easy Answers For The Xbox One

The results are in. And Microsoft’s recently released financials give an even clearer picture. It’s pretty simple; the PlayStation 4 has sold over 7 million units. The Xbox One has sold just over 4 million.

That doesn’t mean that the Xbox One isn’t selling; it’s selling incredibly well. It’s selling well past its predecessor at this point. But you have to look at the competition. The PlayStation 4 is destroying it, and although it would take a miracle for it to stay this way, it’s behind the Wii U’s lifetime sales at this point, making it in last place of the current generation of consoles.

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corvusmd1690d ago

Will these couch fanboys please stop acting like they are financial geniuses now? MS is in the black, Sony is in the red, stop making something out of nothing...if you're worried about the state of one of the largest video game companies...take a look at Sony for a bit. Yeah I think it's ridiculous that they will go under too, but it's more likely at this point. It's still early, less than half a year, and many of these little kids online don't realize that the big picture is far from painted....JUST PLAY GAMES...stop being petty

GamersHeaven1690d ago (Edited 1690d ago )

Funny coming from the financial genius such as your self this is not about Microsoft as a whole this is about Xbox One and the picture ain't pretty there getting crushed in sales.Xbrand has been nothing but a money waster for them they have been losing money ever since the first Xbox.Instead of Microsoft trying to figure out what they could do to improve the brand they have been dumping money in anything that they thought could give them a edge over the competition.As you see now Xbox one is a result to all there failings from the 360 people like you are to blame instead speaking your minds to begin with and seeing what the brand had become you allowed it to evolve hence why Microsoft went the root they did with Xbox One.Your right the picture isn't fully painted I see this failing as the best thing that could have happened to them now with Spencer maybe there is hope that Microsoft can turn the brand around.

@Fridgid-Once again year head start with a 200$ price difference.Btw Microsoft chose to release in those 13 countries can't blame them they had no chance anyways Playstation is more popular world wide.

georgeenoob1690d ago (Edited 1690d ago )

I agree with corvusmd.

Sony is the one on the brink of bankruptcy, suffering layoffs from EVERY SCE STUDIO. From Lead Designers, Game directors, to the CEO himself. All gone.

Meanwhile at MS, Xbox revenue is up 45% and is creating huge profits despite all the doom and gloom on N4G.

It seems PS gamers are more obsessed with Xbox than Xbox gamers. Kind of crazy if you think about it. All they do is hang around Xbox articles wishing for them to fail. Pretty sad.

Kribwalker1690d ago

Wii was crushing PS3 last gen at this point, and we all know how that turned out. Nintendo stopped trying and became complacent with games and sales fell off a cliff. Sorny fans, you don't want to big of a lead, or they might just ride it out.
And Nintendo has the best first party studios around. And yet, there was no saving the wii from it's fall from grace

MysticStrummer1690d ago

@Krib - Wii still won the generation easily, so I'm not really sure what your point is there.

@george - Of course you agree with corvusmd, but GamersHeaven is correct in pointing out that this is about XB1, not MS. For some reason you guys can't differentiate between the two subjects.

The easy answer for XB1 is to drop Kinect and the price, or just drop the price and take a loss, neither of which is likely from MS. Not yet anyway.

itBourne1690d ago

In my opinion it does not much matter what a company does in the gaming market, it is all about image. In a logical stand point the ps3 the last 4 years wld of out sold the 360 10:1 if you go by how well a company does to support its consumers. X1 had a bad image and it thus far has carried over to sales. If any company can come back early and strong thought it is MS, they know how to market and all it takes is one game for them. I think Titan Fall will continue to help as Sony doesnt have an mp game for the common consumer to go tell their friends, hey buy the ps4 so we can play this together, and there really isnt one in the future for the mass market. (even tho I think last of us cld be that game, sony wont market it that way and the mp is to niche style)

DragonKnight1690d ago

@george: Xbox has never generated profit. Revenue is not profit, revenue is income before costs, profit is income after costs and Xbox has yet to make a dime in actual profit. Live is a different story, but that is a service. Shareholders wouldn't want Xbox to be sold or spun off if it was making them money.

Naga1690d ago (Edited 1690d ago )

@ DragonKnight

"Xbox has never generated profit."

That is a patently false statement. The Xbox division of has generated a profit for every single year since FY2008. And not just paltry amounts, either - we are talking $1.32B profit in FY11 alone.

Microsoft may have eaten tremendous losses for the first 5 years of the Xbox brand, but it has been a completely different story ever since. The talking point you are likely trying to cite is the statistic which shows that the Xbox has not generated a net profit over its lifetime. That, even if true, doesn't change the fact that Xbox has been generating profit for Microsoft for the last 6 years.

rainslacker1690d ago (Edited 1690d ago )

Whether and when they started profiting depends on where you start counting. MS wrote off a lot of 360 R&D costs, and their $1 billion replacement stuff in two separate financial years, rather early in the 360's life, which makes the other years look profitable. Then of course there was the money they lost on the original xbox line. That's how a lot of businesses work. Money spent is spent, so all that matters after is the revenues and profits that come the following quarters/years. At no point was MS set to fail due to losing that money, they may just not have seen a return on investment.

Overall, 360 did pretty decent though. The reasons we saw sell off rumors for the xbox brand is because it was paltry compared to the kinds of revenue that MS brings in in other parts of it's business. Even by MS last financial report, their devices division(more than just xbox brand) was only 10% of it's overall revenue.

Considering how much less it costs to invest in the 90% revenue generators of their business, it's not that hard to see why investors may want MS to dump the brand to focus on those other things which MS has a pretty firm lock on in the market, and don't have to keep expending billions of dollars in risky ventures such as the console/gaming market.

Also, green, Sony is not on the brink of bankruptcy. They are still worth 18.5 billion. They just aren't bringing in enough revenue or profits to bring that number up, and for a time, and probably for a few quarters here or there for the next few years, they will lose money. They also obviously have working capital, because they have games in development right now, and are able to market their newest system and do what they have to do to sell their products. If Sony were on the brink of bankruptcy, we wouldn't be seeing AAA game announcements with budgets ranging from $50-100 million dollars. If they were on the brink of bankruptcy, they wouldn't be buying Gaikai, or investing in new tech such as Morpheus...or even the PS4 for that matter.

DragonKnight1689d ago

Naga: No it isn't. The Xbox brand, since inception, has lost $5 billion just being on the market. That isn't including R&D costs before they were released and other costs. The original Xbox lost $4 billion and the 360 added to that loss with another $1 billion. The Xbox brand hasn't been out of that loss ever. Don't confuse revenue with profit. Revenue is just the money you take in, profit is what's left after paying for all the expenses, and because the Xbox brand has never been out of that $5 billion loss, shareholders aren't making money off it and want to sell it. They see MS' other divisions making ACTUAL profit so they want to focus on those divisions.

Live has no costs except maintenance and maybe partnership deals, so it likely accounts for a huge chunk of revenue for the Xbox brand, but it has never been enough.

Naga1689d ago (Edited 1689d ago )

@ DragonKnight

Stop being so obtuse. Seriously, it's like you didn't even read my comment. I already mentioned that the Xbox brand has not driven a NET profit over its lifetime due to the losses it took for the first five years. But that does not change the fact that the Xbox has been driving a substantial yearly profit for the past 6 years (since FY2008).

Shareholders care about investment potential, and with a brand which as been driving profit for 6 straight years, that usually makes for a worthwhile investment.

DragonKnight1689d ago

Naga, NET profit is all that matters. You're agreeing with me and at the same time disagreeing with me just so you can find some way to make the Xbox brand look good. It hasn't made a NET profit, which means it's not making shareholders money and never has. That's literally what I said and you had to go and split hairs.

To finalize, the Xbox brand has NEVER made a profit. It's made a bunch of revenue, but hasn't made any shareholder or the company at large one cent in profit.

Naga1689d ago (Edited 1689d ago )

@ DragonKnight

I'm splitting hairs? I was just about to say you were stubbornly doing the same thing in order to make the Xbox look bad.

You said that the Xbox brand "hasn't made any shareholder or the company at large one cent in profit." The problem with that claim is that stocks/shares change hands constantly. In order to become a shareholder of a corporation, one only needs to purchase a single stock.

According to plain, simple math, any person who purchased stock in Microsoft in the last 6-7 years has seen all kinds of profit. The only way your claim holds any water is if you adopt some unreasonably narrow interpretation of shareholders to include only those who have owned stock for over 10 years. That just isn't realistic. And yet I'm the one supposedly splitting hairs...

The bottom line is this: Shareholders look the current and future profitability of investment options. Although Xbox went through an initial period of generating losses as it crawled out of the black, it is currently positioned within Microsoft and within the industry to continue driving a healthy profit as it has for the last 6 years. Any shareholder or potential shareholder would look at the current trajectory of Xbox and see that it is indeed profitable.

DragonKnight1689d ago

See, you're doing it again. You sound like a politician. You yourself have stated that the brand hasn't made a net profit, I said the brand hasn't made a profit, we're both saying the same thing yet you're trying to goal post change to make it look like the brand has in fact made a profit, when it hasn't. Revenue isn't profit. End of.

randomass1711689d ago

Holy cow, we're now arguing which company has better financial statuses? What is wrong with you people?

Naga1689d ago

@ DragonKnight

We agree on certain basic facts, but I have been very clearly demonstrating particular claims of your to be false. Or at least I thought it was clear. Maybe I need to break this down Barney style for you.

"Naga, NET profit is all that matters."
- Partially correct. Net profit *from the time a shareholder's interest begins* is all that matters. Stocks are exchanged all the time, and people become shareholders of Microsoft every single day.

"...hasn't made any shareholder or the company at large one cent in profit"
- False. Every single shareholder who has taken an interest in the company since 2007 has seen profit generated by Xbox.

"...shareholders aren't making money off it..."
- False again. All shareholders are making money off of it. All shareholders are currently seeing profit generated by it. Only those shareholders whose holdings are all over 10 years old have failed to see the net profit from the Xbox brand.

"Xbox has never generated profit."
- False. To say that Xbox has *never* generated profit undeniably implies that it has never had a profit-generating fiscal period. Given that it the last 6 fiscal years have generated profit, your claim is grossly misleading if not demonstrably false.


You accuse me of politicking and selectively choosing the goalposts, but you are the one who is insisting on calculating profitability in the only way that can ignore the obviously positive trend. The only utilitarian purpose in framing things the way you have is to paint a negative analysis, as your claims stand oblivious to recent history, present facts, and future potential. If anyone is attempting to spin this story a particularly artificial way, it's you.

+ Show (11) more repliesLast reply 1689d ago
KonsoruMasuta1690d ago

"JUST PLAY GAMES...stop being petty"

Maybe you should take your own advice.

mikeslemonade1690d ago

The fact that X1 is selling better than 360 LTD shouldn't mean much. Going by trends 360 was coming from a "low" from Xbox original and it doesn't take off until Gears 1 hit. And it wasn't until gamers found out PS3 $200 more. So people started buying 360s with Oblivion and Gears while knowing 360 was $200 cheaper but that doesn't happen until summer/fall of 2006.

The reason why X1 is selling at a faster rate is because of the good supply and the bigger core group of xbox gamers converted from 360.

cyguration1690d ago

OMG, you put that fanboy in his place. Well done.

MysticStrummer1690d ago

@mike - 360 also had supply problems in the beginning, so yeah the fact that XB1 is the fastest selling XB doesn't mean much at all.

Unless XB1 sales pick up drastically, 360 will eventually be the fastest selling XB again because it will have sold more in the same time frame. I'm not sure when the early 360 supply problems ended but those numbers eventually picked up in a big way.

Flamingweazel1690d ago

Wait so your a financial genius now???? Dat irony,

air11689d ago

You didn't know? N4g breeds geniuses! I mean how else you think they come up with such clever spins.. Lmfao look at rainslacker talking about it depends where you start counting! These fools know it all.

TheXgamerLive1690d ago (Edited 1690d ago )

Actually the answers for the Xbox One are very easy. Their doing all the rigbt things and are on their way to reaching incredible heights and doing things better than theyve ever done before.
The sdk changes fo come are great for gaming and DX12 will bring new dimensions to games and cloud compute will increase the far reaches of what games can do.
People forget XB1 is only in 13 markets currently and adding some 26 more in september. Quickly sales will increase then who will still complain lie and be jealous fanboys????
Again the only complainers are sony fanboys. Wow pathetic. Move along.

arinaborina1690d ago

dude its n4g, logical comments and anything good about xbox is a sin lol

liquidhalos1689d ago

Sorry to ruin your rant but if you check again its talking about the XBOX not MICROSOFT.

+ Show (3) more repliesLast reply 1689d ago
FrigidDARKNESS1690d ago

Once again 72 countries vs. 13 countries ps4 better be winning.

Christopher1690d ago

Considering they've released in the territories that made up almost 90% of last gen sales, I'm not sure that has much bearing.

Based on 360 numbers

North America = ~57% of 360 sales
Europe = 31%
Japan = 2%
Other = 10%

Since XBO is fully released in its NA regions we have:

North America = ~3m
Europe = ~1.6m
Japan = 105k
Other = 530k
Total = ~5.2m

And that's based on 'favorable' numbers and with the expectation that they would sell the same as the 360 did. The PS4 is just barely at 500k sold in Japan, which seems to not be that interested in next-gen consoles yet, for example.

DigitalRaptor1689d ago (Edited 1689d ago )

You lay down the facts like a winning hand in a poker game....

and yet, they still don't listen.

The denial is strong with this crowd, and it's pretty offensive to watch people read facts and brush them away in denial because of their biased way of thinking.

doolin_dalton1689d ago (Edited 1689d ago )

The continued attempt by the pro-Sony crowd to downplay the amount of extra countries is absolutely ridiculous.

By your own figures, 360 sold 10% in "other" countries. So, When Xbox one releases in the rest of the world, that 10% will make a big impact, even if the sales are far below PS4's in those countries.

Right now, PS4 is selling "X" amount in those countries, while Xbox One is selling ZERO. ANY sales by the Xbox One will close the gap, as PS4 is already on sale there.

Xbox One is currently at 5.1 million shipped. If those other countries add up to 10% for MS (like they did with 360), that's 510,000 more sales. That means that the PS4's lead of around 2.2 million will be reduced by 25%.

These other countries will not put Xbox One ahead of PS4, but they will eliminate a large chunk of the deficit. Of course, Sony supporters will continue to bury their heads in the sand and pretend the extra sales territories are meaningless.

Also, why are you making excuses for the PS4's sales in Japan? Wasn't the PS4 supposed to set Japan on fire when it launched? Wasn't it supposed to sell a million in the first week? That's what I kept hearing around here. Maybe Japan just isn't interested in the PS4 - did you ever consider that?

Of course, you're quick to do Sony damage control when sales are less than expected, but Xbox isn't given the same courtesy.

Christopher1689d ago (Edited 1689d ago )

@doolin_dalton: You're actually agreeing with me...

"Xbox One is currently at 5.1 million shipped. If those other countries add up to 10% for MS (like they did with 360), that's 510,000 more sales. That means that the PS4's lead of around 2.2 million will be reduced by 25%."


Right now we have 7m PS4s and an estimated 4.2m XBO (sold to customers on both figures, not shippped).

4.2m * 1.25 = 5.25m

Number I mentioned above: ~5.2m

So, not quite sure how I'm yet wrong and yet you agree with me on the gain. I think the confusion is that you are wanting to use shipped instead of sold-to. But, otherwise, I already said it was a 25% gain. But, even that wouldn't "beat" the PS4, which is what many attempt to claim with the comment to which I was responding.

Majin-vegeta1690d ago (Edited 1690d ago )

Once again outside the U.S and some of the UK most people don;t care about xbox.That is all Sony territory -_-.You think you people would know that by now.

BTW MS released in their strongest territories yet are failing ;)

KinjoTakemura1690d ago

The countries that both are in, Sony is still out selling xbox1. Just thought you should know that.

Flamingweazel1690d ago

LMAo at this dumb argument, MS is already in the countries it sells 90% in.....those other countries won't make much diffference at all, reearch is your friend

doolin_dalton1689d ago

Won't make much difference at all? What planet are you living on?

If those other countries account for 10% of Xbox One sales, that's over 500,000 more consoles right now. That means PS4's lead would immediately be reduced by nearly 25%. PS4 would still have the lead, but not by nearly as much.

Simple math is your friend.

Axios21690d ago

You're right

The US and UK only account for 64% of 360 sales.

The remaining 36% is made up of 39 smaller countries of which only 11 sell the X1. While the smaller Countries vary in population, it averages out to a little less than 1% per Country.

To say Europe is 31% is misleading (56 + 31 does not = 90 either) because the X1 is not on sale in all of Europe.

A 10% increase in X1 sales (as suggested by Cgoodno) would mean that X1 sells almost 80% of PS4 sales with less than 60% of the Countries. Could be significantly higher, as in a 25% boost from he 26 Countries and China resulting in 90% of PS4 sales from less than 60% of the Countries.

30m ppl outside the US and UK bought 360s, so saying it doesn't have support outside those regions is ridiculous.

GarrusVakarian1689d ago (Edited 1689d ago )

You really need to just accept some truths man, look at your comments.....comment after comment reciting numbers and getting in a huff about things you can't accept. Just stop. Your denial is relentless.

Production for the X1 is ALREADY slowing or possibly stopping in order to sell X1's on store shelves that aren't selling. If that slow-down is happening already in territories that MS deems most crucial....then what hope does the X1 have in territories that are already PS4 dominated territories and won't bring in a fraction of the sales of the 13 it's in already?

Think about it.

AceBlazer131690d ago (Edited 1690d ago )

Let's not forget the PS4 hasn't gotten 1/3 of the sales, discounts and bundles as the Xbone. The PS4 is still selling on it's own merit right now.

If your the type of Xbox fan that watches sales, this is not gonna be a pleasant gen for you.

As soon as PS4 sales begin to decline get ready for sony to get off casual mode and announce some bundles.

And for the love of god answer this question already.Excluding the other countries how is the PS4 still outselling the Xbone in the countries that have both every damn month.NA,UK,Submarines.

zerog1690d ago (Edited 1690d ago )

The thing people don't seem to understand about that is that while 59 more countries sounds like a big number they make up very little of the total sales. I'm not saying consoles don't sell in these places, they do but if you just look at the actual numbers people and use some logic you'll find that its not enough to be worth mentioning. 7 million ps4s sold I'm 70 countries you say? Has anybody stopped to realize that half that total was sold in only 2 countries, the U.S. and U.K.? Then you have x1 in 13 countries and 3/4 of its total sales are in those same TWO countries? If you take away the x1 sales for the U.S and U.K. it leaves a rough average of only 100,000 consoles sold in each of the remaining 11 territories. Do you people think ms is stupid? That a company that big, worth that much money and in the business to make more money that the first places to get their product would be the places the expect to sell the MOST of them? I really wish sony would come out with official numbers for every territory individually so everyone could see how stupid and pointless this excuse really is. Sony didn't release in those extra territories to get a lead, they already have that without them, hell their U.S. and U.K. numbers alone almost tie x1s global sales. All they're doing is expanding there market, even if the sales aren't as good. That's just business. Its for the same reason you find the same stores and restaurants in rural areas as you do cities, because even though the sales aren't as good there are still sales and over time it adds up. Just keep in mind that even though it does add up over time its still adding up even faster in the bigger markets so the averages still stay aboit the same.

TFJWM1690d ago

Well said, what people also don't seem to realize is that PS4 is selling well at MAX production. If Xbox1 is also doing MAX production the numbers would see be the same since sony had 7 sold thru compared to 5 million shipped. Microsoft would still only have 5 mil sold thru max unless they are holding back

kingPoS1689d ago

That's the beauty of economics. On a scale of deployment the PS4s are like 'Walgreens' and the Xbox One's are CVS's. Both are known, but one of them is more recognized and spread out through cities & states.

Gateway MT6706 2008

MysticStrummer1690d ago

Once again, the weak argument about the number of territories appears.

Do you understand that when the two consoles initially released XB1 was out in more territories than PS4, and PS4 still outsold it at that time?

MS is better off keeping it's strongest territories supplied than to thin out that inventory by sending units to places where few will sell.

Worldwide, PS is simply a stronger brand.

doolin_dalton1689d ago (Edited 1689d ago )

The only weak argument is the pathetic attempt to downplay how much those extra countries WILL matter.

The concensus around here is that MS can expect around 10% of sales from the countries in which the Xbox One hasn't launched yet. Considering Xbox One has already shipped 5.1 million units worldwide, that would mean 510,000 more Xbox One's.

Given that the sales gap is currently around 2.2 million, those extra 510,000 systems would immediately shave nearly 25% off of PS4's worldwide lead. PS4 would still be ahead, but by a much smaller margin. The 2:1 (or greater) margin that die hard Sony supporters are hoping for would be nearly impossible to attain.

It doesn't matter that Sony is stronger in those other countries. ANY Xbox One sales will close the gap since PS4 is currently unopposed.

rainslacker1690d ago (Edited 1690d ago )

Who's fault is that? It appears MS has plenty of units to stock 72 countries, why don't they do so?

Language barriers? Please, Windows has every conceivable language already built in(go and check, you can change it in your own version of windows...all the way back to Win95), and that includes voice control. I never once brought the excuse that they had to localize the actual machine. Even if they did, it certainly wouldn't take 6-12 months. Heck, half the countries it's currently released in don't even have the full feature set, so why not just release it in 72 countries?

The reason MS hasn't released in those countries is because they would have to spend more money than they'd get back for it for the time being. Each region is a separate marketing campaign. Separate filings with applicable government agencies, such as the FCC in the US. Setting up new distribution channels. It's expensive. MS doesn't see the profit in doing it right now, and are probably waiting on a third party to pick up the rights to distribute in other countries in their name. They did so with the 360. Sony had a couple 3rd party distributors for the PS2. Heck both Sony and MS have completely separate and autonomous divisions with their own respective president and employees to handle such things

If MS thought they could sell another 2 million consoles by releasing in more countries, and catch up with Sony, it'd be done already. MS obviously knows that those extra countries aren't going to do much for them right now, or it would be done. MS aren't slouches.

So yeah, MS could go and release in 72 countries. Shift their stock around and get some systems sold. But MS apparently knows that the sales aren't going to justify the work and money involved in doing so.

randomass1711689d ago

Sigh. Microsoft's primary market is the west. They should be leading there but right now are not. It is unlikely that releasing in more nations will make a significant difference. :/

+ Show (8) more repliesLast reply 1689d ago
D3ATH_DRIV3R_7771690d ago

They better hope that it sells well in japan since they announced that 48 japanese game devs will be making games for it, and this surprise they said they got for the TOKYO GAME SHOW in september!

KingDon1690d ago

People need to calm down. The Xbox One is still selling well. At this stage of the life cycle its the third better ever. Calm down. It is miles ahead of where the 360 was at this stage.

T21690d ago

Actually one of the most alarming stats lately is that x1 has declined in sales to the point where it's currently selling less than 360 and if that graph continues it will soon be selling at a lower rate than 360 consistently... The sales were front loaded, check out the numbers

KingDon1689d ago

It is the start of the console race. Do you remember how far behind the PS3 was?

It caught up.

Xbox One will probably too. Honestly... both consoles will have sales parity down the line. The difference in lifetime sales will not likely be huge and they both will end up being successful consoles.

Mithan1690d ago

Dumb article.

PS4 is winning. It doesn't matter at this point because it isn't about winning, its about making a profit and doing well, which the Xbox One is doing.

n4rc1690d ago

Nope.. Someone has to win so we can feel better about ourselves!


I actually preferred it when all the fanboys were screaming 5:1 or 10:1

The closer the ratio, the lamer the attempts to bash it..

T21690d ago

No numbers shown have xbox making profit. They increased revenue not profits there's a big difference

Mithan1689d ago

Your comments are irrelevant. I don't give 2 craps who "wins" the console war, only idiot journalists posting "Articles" for advertising revenue and feeding off the dumb, cares about this.

And before you accuse me of being a fan boy, I don't own either next generation console and when I do buy one, it will be a PS4 first. I doubt I will get a XB1 for a while

I am only commenting on the stupidity of these articles and the people that feel they have to turn it into an issue. This website is full of 10 "mage page news articles" a day because of this garbage.

Nobody cares, yet everybody is trolled into it.

T21689d ago

So you don't care, don't own a console but you stopped by just to say my comment is irrelevant. Actually my comment is right on par with the article, consoles in general are hard to turn profit on and xbox needs some good sales.
Your comment however is useless and irrelevant and contribute absolutely nothing except the usual whining

rainslacker1690d ago

Given that they still have to cover the R&D cost of the X1, they still have a long way to go to make a profit. Assuming they make $50 a console(not sure the actual number), that's still not that much on a R&D budget of a couple billion. Won't even get into the actual marketing budget, or distribution costs, etc.

They of course have other revenue streams associated with the X1, but neither Sony nor MS, and probably even Nintendo, are making a true profit compared to the cost of designing their machines.