Xbox 360 Manufacturing Costs cut by 40%

Source

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%.

Hopefully this will mean that a price drop may not be too far off - even if it' s just a little one. The rest of the article also has comparative pricing of the PS3. According to this article, it currently costs Sony $840 to manufacture their PS3 60GB version, and $805 for their 20GB version.

Wasn' t there just a post about the 360 costs going up! This is better news than that :)

" What most people need to learn in life is how to love people and use things instead of using people and loving things."
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ORIGINAL: Alecrein

Wasn' t there just a post about the 360 costs going up! This is better news than that :)

And we decided that was a load of rubbish.



Microsoft are going to win this gen as far as marketshare is concerned. They have tremendous 3rd party support, many more exclusives and will be able to remain cheaper.

If they cut the price very soon then how could Sony possibly catch them?!

Nvidia had MS over a barrel with the xbox 1 architecture - whilst sony was consolidating everything to the one chipset for the ps2 they were forced to hobble on at horrendous losses. Cost reduction can win any battle in this industry. I think I have said before that at the time 40% of Nvidia' s profit came from the xbox chipset, which was why they wouldnt allow MS to develop an incorporated design. If you can get manufacturing costs down you tie ratio will be less important too, and there is a chance of profit (or even breaking even) far earlier.

I' d love to know what plans Sony have for the cell etc.. in terms of it' s integration, especially as the console greats of our time have heavily referenced designs of their previous consoles, where as the PS3 is (despite being a beomoth of a hardware challenge which should be respected) nothing like any console before it in terms of architecture. Mind you they did say that about the PS2 too...

ORIGINAL: musashi

Nvidia had MS over a barrel with the xbox 1 architecture - whilst sony was consolidating everything to the one chipset for the ps2 they were forced to hobble on at horrendous losses. Cost reduction can win any battle in this industry. I think I have said before that at the time 40% of Nvidia' s profit came from the xbox chipset, which was why they wouldnt allow MS to develop an incorporated design. If you can get manufacturing costs down you tie ratio will be less important too, and there is a chance of profit (or even breaking even) far earlier.

Given the chaos that Nvidia caused Microsoft, I wonder how it will turn out with Sony? They too are relying on Nvidia for their graphics solution, and if things stay the same, will Sony face the same problems?

oooh that is an interesting one!

Hopefully they will have learnt from the mistakes of the past generation (well you' d hope that at least) and have got a Sony-style agreement in place from the get-go. I' ll do some digging, whough it may be a little too early to tell.

ORIGINAL: Majikdra6on
And we decided that was a load of rubbish.

Hold the phone! THis information came from Microsoft them selves, according to Tomshardware, which is a very reputable hardware site (unless you have evidence to contradict the sites credability). Here the Link again

http://www.tgdaily.com/2006/11/07/xbox360_production/

According to the company (microsoft), the Xbox 360 is more expensive to manufacture than one year ago. And considering the fact that Microsoft was estimated to pay $550 to get one Xbox 360 out the door in November of last year, the company could see increasing pressure and have little room to fend off the PS3 and Wii through more aggressive pricing.

and link - http://www.tgdaily.com/2006/10/26/microsoft_q1_2007/

The company stated that the cost of revenue was " driven" by higher shipments of Xbox 360 units, increasing cost of its online services as well as " higher Xbox 360 unit costs." Especially the higher Xbox 360 unit cost is surprising, as the business model of game consoles tends to be at least partially based on decreasing unit costs over the lifetime of a device.

Whether or not you choose to dismiss this information is your decision, but this did apparently come from microsoft themselves, and there has not been any other statements from microsoft to contradict Tomshardwares commnets.
BTW Isuppli are only giving there best estimates in the article, they do not know this information because microsoft, Nintendo nor sony have not publically disclosed that information (yet). They (the isuppli estimates) could be right but that doesn' t change the fact that microsoft actually made the comments i quoted.

In either case microsoft doesn' t need to drop the price of the console, it doesn' t need to. It is well established, got a large catalogue of games (160 or so) and currently sports the best graphics of all the next gen consoles. Also microsoft do not want to devalue the 360 by dropping its price to compete with the newly released ps3, at its current price 360 currently provides better value then ps3.

If they cut the price very soon then how could Sony possibly catch them?!

By marketing PS3 as a cheap Blu-Ray drive, but that' s about it.

Honestly though. I don' t think Microsoft is going to drop the price on their console any time soon. Not before next Christmas I think. (Anybody want to place a little wager?) Why drop the price when they' re selling farily well anyways?

If they cut the price very soon then how could Sony possibly catch them?!

They cant. With Sony losing over $200 for every console and not selling games, its Mission impossible, except Sony cant do cool flips and dodge bullets