Why Kinect 'Cost to Make' Articles Are Deceiving

"Whenever a new piece of hardware/accessories comes along from a major company, articles pop up all over the internet about how much the objects cost to make. Most point out to users the huge price discrepancies between the cost to make and the cost to customer, hoping to incite mindless raging trolls or fanboy flaming – all which make them money in hits.

The number that most of these articles are reporting is called the bill-of-materials which is the cost of the parts that make up the Kinect Sensor. This number comes from a 3rd party who takes apart a unit and prices out the components. Yes, it does only cost a meager 56 bucks for parts, but what really needs to be added into the equation to find out what the Kinect costs per unit?

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CrAppleton2842d ago

Jesus 30k for prototypes?

BShea2841d ago

It's absolutely insane! I wish I could see what some of the prototypes looked like and what MS learned from what they succeeded and failed at.

DuneBuggy2841d ago

Ehh..30k wouldnt even cover the bodywork on a concept/prototype car.
Even a subcompact like a Ford Focus would easily cost millions in total development costs.

TheOldOne2841d ago

@ Dunebuggy

and why are you comparing cars to a gaming peripheral?

DuneBuggy2841d ago (Edited 2841d ago )

Just showing that prototypes of just about anything are far more expensive than their future mass produced cousins.
30k for a Kinect Prototype is cheap in the grand scheme of things.

BShea2842d ago

Very interesting article. People like to jump to the same conclusion with games as well. Just because it's printed on a blu-ray or 360 disc that costs a dollar or two to produce doesn't mean thats the only cost incorporated into the actual making of the game.

Nice insight.

Millah2841d ago

This sort of insight should already be common sense. Of course R&D costs companies a ton of money. I shake my head anytime I see a "costs to make" article. Apparently these guys think that products just design and build themselves. More or less its just a reflection of how much ignorance there is in journalism, that an article like this needs to remind people of the obvious.

lastdual2842d ago (Edited 2842d ago )

It's the same with any product. Reasearch & development costs, empoyee wages, marketing expenses...

Making a profit isn't 'evil', it's necessary for businesses to stay alive. And especially when you're talking about a luxury good (yes, it *is* possible to live without video games), harping over profit margins is a little foolish.

Demand dictates the price. If you don't want to pay for it, don't. Protesting with your wallet will make more of a difference than complaining on the internet.

killyourfm2842d ago

Agreed on all counts. What I think *is* evil are sites that ignorantly proclaim something costs $X to make and therefore generate $X profit.

S1nnerman2842d ago

As a comparator, the Gillette Mach3 safety razors were introduced in 1998 after more than $750 million in research and development costs. Seriously, $750 million in R&D alone!! Then marketing. Salaries etc. The blades used by Mach3 only cost a few cents to produce, but can sell for over $2 each. If we only considered the production costs vs sale price, it would be misleading. It's the same in every industry as lastdual says!

killyourfm2842d ago

Holy crap...$750m to develop a razor. Staggering..

S1nnerman2842d ago

I saw it on TV ... utterly amazing. I couldn't believe it lol I was thinking, how hard can it be?!?

DuneBuggy2841d ago

Its funny.I USE a Mach3 razor. Gillette mailed me one around 98'-99' (I didnt request it either). Been loyally buying blades for it ever since.

jacksons982842d ago

Microsoft probably pays less than that per unit since they are buying in the millions and they are made in China.

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