Now that the 360 is finally out, plenty of curious engineers at iSuppli have had time to pick apart the hardware and develop a detailed cost analysis of the product. According to their findings, each console is costing Microsoft approximately $525 – which is 32% higher than the retail price of $399.
“It should be noted that iSuppli’s findings do not include the projected cost of manufacturing each unit, so the total cost to Microsoft likely runs even higher.”
Here is the breakdown of the XBox 36o’s core components by cost:
Custom-built triple-core PowerPC chip from IBM: $106 – add in other circuits: $340
ATI GPU with embedded NEC DRAM: $141
Other components including the DVD drive, controllers, cables, etc: $44
So why would Microsoft sell the product at loss of $125 per console (not including manufacturing costs)? It seems unlikely that Microsoft would be able to make up the difference through software and licensing fees alone – although, over time, Microsoft should see a reduction in materials costs. Perhaps the strategy is to sell it at $399 to allow for faster adoption – and profits will come via the combination of fees game sales and better yields on parts.
Plus, we cannot forget any ulterior motives that Microsoft may have.
Source: BetaNews
Posted by Sean
