According to this, Microsoft is losing money on each Xbox 360 sold. I have an extremely hard time believing Microsoft would do anything that involves losing money. Is it true?
Look up “loss leader”.
–Eric
Ya, but I just can’t imagine Microsoft doing it lol. Anyways, thanks.
The article is 5 years old 
Lol, but I only wondered about it today 
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lolz, be careful with companies saying there losing money mate, most of the time they really mean this:
Projected profits from sales $1000000
Net profit from sales $100000
Cost of production $10000
= a $900000 loss in there eyes anyway
In there eyes they lost money, in reality they just made less than they thought. Seen stuff like this over and over again with big companies, making you feel sorry for them, its just free advertising to them.
@MrSmive, not quite sure how that relates to cost per xbox.
it doesn’t but they make it seem like it does, same thing went down with BT and the British gas, they predict there year end results, then say they lost money when they don’t meet that quoter, then they moan to us about it like its our problem, then they either shut up or raise there prices. Just saying don’t take there word for it, probably costs them $50 a unit if that to make and ship a 360, sold for $300 thats a 600% markup, when they don’t get what the hope back they blame the production cost so as they can charger more. Just simple business crap, cheat the little guy out of as much as possible, then blame him for not letting himself be cheated out of more money lol. God bless capitalism lol.
It does and it doesn’t affect there bottom line
Think about this carefully guys I invest in penny stocks and microsoft stock heavy and the stock of microsoft is still a good buy. Therefore the xbox 360 might be a loss leader. But reconsidering the fact that the Xbox 360 is super popular this is not likely.
I would love to get the right stuff to play xbox 360 on my computer http://pptrevshare.com surfing TE’s all day gets really boring.
I find that hilarious. $50 a unit is a ridiculously low assumption.
Supposing it is $50 to make, which it isn’t, Microsoft doesn’t get the entire $300 at retail.
Yes, $50 is absurd. It’s quite typical for consoles to cost more to make than to sell, at least to start with. Eventually manufacturing gets cheaper, but even so they actually make money by selling games, not by selling consoles. This is why you have to be a licensed developer, because you pay the console maker a percentage of your sales. (Which might be why Sony disabled Linux on PS3s…some people were buying them as cheap fast boxes for certain kinds of processing, like Folding@Home, rather than playing games, which doesn’t help Sony make any money.)
–Eric
I doubt that they are still losing money on each XBOX. But in the beginning they sure were. That’s why the attachment rate of games per console is such an important stat.
yep, the console isn’t what brings the dollars back to Micromouse, it’s the games. same goes for playstation.
An Xbox might cost only $100 (example) in raw parts to make, but that doesn’t include the 200+ million dollars they spent designing it, testing it, building development tools for it, implementing their production systems etc…
Both Sony and MS make massive losses per unit on their consoles for the first few years until cost per unit gets cheaper (parts become cheaper, development research costs are paid off etc)… and then loose again as they price drop. Sony only recently started making money (finally) on the PS3 (slim) and now are about to loose money again as they are expecting to drop the price.
MS and Sony both make money from many other lucrative aspects of the console industry.
MS have been making money on the Xbox for a long time now, it’s Sony who recently caught up, they were losing a LOT of money on each unit till earlier this year. I’m not sure how MS will ever make it’s money back after its huge and ridiculous purchase of Rare, Bungie etc. And like so many things in the games industry, huge ammounts go into marketing, often more money goes into marketing than developing a game. Bit sad really.
Well bungie recently split from microsoft, so they don’t have to manage them anymore.
They make money on Game ( more money when it’s come from their own studio ), xboxlive purchased ( VOD, games, TV), accessory etc…
Microsoft sell an average of 5 games for each console.
The kinect have a 500 Million dollars budget just for the advertising, to sell a least 5 million of Knitec. On a 150$ Kinect you have 50$ going into the marketing…
But marketing kinect, is also a marketing xbox360, and microsoft etc… That’s not a total lost.
When they market one of their product, they also market the brand
Both Sony and Microsoft have been “losing” money with their consoles but they do make their profit by selling software (games) and accessories, like the Kinect.
Lol, got a lot of replies. Thanks everyone .