Microsoft Trims Xbox 360 Manufacturing Costs by 40pct

Microsoft Corp., the world's leading maker of software, is earning money selling the Xbox 360 hardware, according to updated teardown analysis from research firm iSuppli. The information means that the software giant has managed to lower the price of its latest game console by nearly 40% in one year.

According to iSuppli's most recent analysis, the premium version of the Xbox 360 game machine equipped with hard disk drive has a manufacturing and materials total of $323.30, based on an updated estimate using costs in the fourth quarter of 2006. This total is $75.70 less than the $399 suggested retail price of the Xbox 360. Even though it is obvious that Microsoft still has to subtract freight, toll, retail partner's profit and other possible charges, it is highly likely that Microsoft has either managed to reduce its loss to minimal, or is making a tiny profit selling the $399 flavour of the Xbox 360.

A year ago the total bill of materials (BOM) cost for the Xbox 360 Premium, including hard disk, the DVD drive, enclosures, the Radio Frequency (RF) receiver board, power supply, wireless controller, cables, literature, and packaging, reached $525, well above the retail price of $399, according to iSuppli. Considering the up to date BOM, Microsoft has managed to reduce the pricing of its console by over 38.5%.

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calderra4982d ago

Looks like Nintendo isn't the only company after our pockets, after all. Heh.
"We don't have ulterior motives. (We're not pushing a format, we're not pushing a premium online service. We just want your money however you'll give it to us, plain and simple.)"

Funky Town_TX4981d ago

There is more to selling a console that just hardware cost. This is the advantage to being out for 1 year. Sony had the same advantage with the PS2. Now with the ps3 BEING $600 M$ does not have to drop the price. You can thank Sony for raising the price of consoles.

Oncnawan4981d ago

If the PS3 had launched with a DVD drive at the same price as the 360, Microsoft would be lowering the cost of the 360 right now to remain competitive. However, as Peter Moore said, when Sony announced the PS3's price, the 360 got an automatic price cut.

Thank Sony for higher console prices.

MicroGamer4980d ago

With PS3 costing Sony $840 each to make, an announcement that MS has lowered production costs by 40% must really hurt. MS has the ability now to destroy Sony's market share by dropping retail prices even further.