http://www.gamesarefun.com/news.php?newsid=4902

Prety early, normally they last quite a while after the console has been replaced.

Makes sense though, seeing as M$ lose money on every one sold, i can understand them wanting to quit production ASAP

no, actually the longer you make a console, the cheaper it becomes... now i bet they don't loose much at all, perhaps they make a bit.

This is a nvidia not a m$ decision, most likely nvidia isn't making enough on the chips since the market value has dropped due to the above hardware business trait.

Err, yes, thanks for that spud I know that, BUT M$ are still losing money on every xbox made (although not much), they HAVE now turned a profit from the xbox, but it's from Xbox Live revenue and software sales, they still lose on every console sale



I'd be very suprised if Nvidia are allowed to stop making the GFX chips without M$ OK'ing the decision.
This is old news coming to fruition, M$ stated they would stopping production around the same time as the xbox360 was announced, and there should be enough stock to tide them over until it's actually released.

Doubtful. Profit as your using it has to do with recovering sales they had lost in the period of investment, when the hardware cost more than construction. Profit as used here means the cost of components, production and shipping to the store being less than the RRP. There's a tiny profit margin on the hardware, they just then cost everything against the high losses they made during the first 2+ years of the lifecycle, and its no where near enough to make it back. It does not cost more to but together and ship the xbox to the store today than the rrp though.

The hardware was at great cost back in 2002, but today, putting together a new piece of hardware will not be at cost.

So they won't loose anything on the hardware, they will make a profit on the hardware now, but its sure as hell not enough to make up to the estimated $150 is used to cost them. Add into the mix the software and licensing and now they are approaching pushing a profit.

But overall profits isn't my point as your making, my point was that it doesn't cost them to make and sell the hardware anymore. It used to be true it costed them, for sure, its standard console market template to do this... you don't have to tell me that. I think it will be highly unlikely given its current stage in the system lifecycle that it looses significant, if any money at all on the hardware.

They are all off the shelf products, now very, very, very inexpensive ones, they have established construction plants across asia, which comprises of the bulk of a consoles production costs (propreitry components). I mean cost the supply components these days and its well under ?40, add in propreity construction and labout and its not likely to be more than ?100 (which is beyond Sealand liberalist estimates), which is retail these days isn't it?

Do you have a press statement or anything to back this up or are you going on old articles still? I mean going on 2002 articles it will be hard not to hear it because it was true way back then, but these days...

I mean if you follow this, it says 3 years ago that they lost between $20 to $150 on each console.
http://news.com.com/Xbox+drags+on+Micro ... 18798.html
There's an analyist that says 'they'll never make a profit on the hardware' but i'm sure if you dig him up he'll eat his words. That's 3 years ago for pete's sake! Of course they'll be at least breaking even by now on the hardware.

Problem is they've got an abundance of machines they've made at cost. But every new console made today will be at profit, if its all about helping or harming with a unit sale, you are helping them very slightly. They need to shift every console they have in the backlog they made at cost, and recoup sales of a couple of software titles (or pads, dvd playback kits etc.), beyond that, even a sale of the hardware by itself is a positive for them.

To make a profit they have to recover sales from the period when the hardware was costing them to produce, but now to put together the hardware its cheaper than it costs to sell them obivously.

I'd hazard a large bet they no longer lose money on the hardware, the losses are from the period when they did, not now.

I'd price you the components and construction cost myself, but i'm really can't be arsed nor care that much to do it (open challenge people! ).

Just a word of warning that saying it costs m$ to buy an xbox today might be playing up profits to the contrary. Of course they'll need the continued software sales from established customers to get a total profit from the situation and recover losses from the period the xbox department was in the red, but nethertheless, they do not loose money on a hardware sale today.

It's like playstations. The PSX made quite a heafty packet in the end, especially the latter brands like the PSOne which launched after PS2 did I think (that was ages ago though )



imo, Of course they can... especially given that microsoft has been fighting them on several noteable occasions, they've actually already once switched the GPU the console uses, and has now ditched nvidia for ATI on the xbox2. I doubt nvidia are happy chappies, but they'll have made a bundle off of m$ in the long run which is what we like to hear

I doubt they did go to m$, "oi bill, swivel on it", but they might as well have done as far as anyone would care. They'll be way out of contract by now... there's not much microsoft could do if they wanted to, but they obviously won't give that much of a monkeys since they're really concentrating on the x2 as you stated. I doubt anyones bothered, but I think its rather rash, since consoles still continue to push well into a 'replacements' launch period.

I doubt they'll switch GPU again, would cost too much to very little point.



obviously, but its still very unique at this stage (barring a few catastrophic console outings... mentioning no names). The xbox was still marginly 'successful' in the scale of consoleland outings. All other GPUs generally go on for long after console lifespans, they were making psx gpu for ages after the ps2 was launched.

I don't think ATI will be shutting down gamecube plants, or Sony be stopping PS2 emotion engine production in the next few years anyway.

Quote from here : http://www.gamasutra.com/php-bin/news_i ... story=5397

Although it's talking about THIS YEARS first quarter results, M$ are still losing money per console

errr oh yes, and we care because i still don't own an xbox (lol) and I want the price market to crash. If there's a shortage of xbox hardware units, given microsoft has stopped making them essentially, prices won't crash quickly at all. I want some media standalones... sigh.

I'll keep my eyes open for ya mate

How little do you want to spend?

That's the wrong use of the word profit in this context.

Summary:
When you read "m$ hasn't made profits on the console", it means that their total running profits is negative, not the profit on a single unit in todays market which adds to microsofts captial gain.

When you read "m$ now makes a profit on the console", it means that their total running profits on the consoles is negative, but the cost of the xbox's production and shipping is less than the RRP, hence they make a profit/gain with a unit sale. This is important to note, because it means its a positive for microsoft when someone buys a console today.

The reason its halfway inbetween the two atm is that they haven't sold enough consoles in the period it made a profit, than the period when it didn't make a profit, but instead cost them up to $150 a go.

The first is a profit in terms of the total franchise outing, the second is what they make on a single sale (ie. is it good or bad? and the answer is its good for them, bad for the free world).

The first can only really be used in retrospect, has this business venture been profitable? The answer thus far is very close, but the overall answer is no, they haven't quite recovered losses yet (that's from the period when both were no, they didn't make any form of profit).

As you can see your using a very different usage of the word profit. Its very misleading if you don't sit back an analyse; what people are generally wanting to know is, does buying an xbox harm microsoft? And the answer is no it doesn't. In a perfect microsoft world, they would shift lots and lots of their consoles, and then they would make a profit on hardware sales because the small profit they now make on the consoles will outweigh the amount it used to cost them.

As a consumer what people today will want to know is:
If you bought a first hand xbox today you will not be harming microsoft, but you won't be giving much profit to make the venture worthwhile. However, they still make a profit from the hardware you have bought. If you buy a couple of software titles at the full retail you'll be giving them more money than buying a console. So if your the anti m$ type, buying and chipping only gives them pittance, but it does not harm them anymore, if you buy only second hand goods, you give them sweet f*ck all, obviously.

ideally i'm willing to hand over 70 sheets for a good xbox (that's one that will play everything with a decent drive).

Sometime down the line i'll be buying a couple, probably when they hit ?50. I expected them to be available at around this price today, but i've been pretty far off the mark with that prediction

Think about the numbers though, if it was the afroementioned $20 - 150 loss on the console in that article posted earlier for over a year (and losses well beyond a year) remember and when the most significant portion of units were sold

They make ~$15 on a full retail title, and just under $10 on a ?39.99 title. Lets take $15 as a very liberal profit, this is too high of course, but its best to be liberal... so,

15 x 8 = $120
$150 - $120 = $30 in the red still. How many consoles did they sell in the first year? times $30 by that and you'll get billions in the red in the first year alone.

And they will hardly ever pull in $15 licensing fees, more like $5 to 10.

Its no wonder they still record a running cost on the hardware doing the maths, they lost buckets loads at launch and that's not even including devleopment costs and advertising.

Good point, Given the specs on the new console though, it looks like (unless they sell @ an insanely high price) they'll take a fairly substantial hit per machine again.

Rumoured price BTW is $360 (!) which is pretty cheap

yeah they'll take a real huge hit on the hardware, far in excess of what the xbox cost thats for sure. Given that they're setting out to 'win', that means marketing is going to be huge, development cost are already in excess of the xbox and its not a surprise its going to be aggressively priced. They're going to take perhaps even a $200 hit on the first batch, which is loads.

Sony's going to be taking it just as bad too.

Its all good news imo, i hate gaming companies that have no vested interest in gaming. I hate publishers (sony,vivendi/universal and microsoft) just like i hate movie studios (sony, universal, paramount). There what make both categories suck since they don't care for content at all, and both movies and games at times try their damnest to hang onto as much artistic integrity as possible.

I think xbox2 is going to be cracked damn quick this time too. They don't seem to be changing the basic business model that much at all.

M-soft losing Money? BOo freakin' HOO!I lost money buying their shitty xbox, that MELTED because i left it on for 20 hours. 8 bit nintendo could stay on for days, so can PS2. But know xboxes have to heat up too much. You know what they told me to do about it... buy a new one! Great tech support over there at the big M.....

From an interview with M$ chief Xbox officer Robbie Bach. The whole thing is http://www.gamesindustry.biz/content_page.php?aid=12104

Mind you in the same article they pledge to continue making xboxs throughout 2006 and continue software support until 2007(!)

yeah, every other article seems to sing a different tune. nividia has stopped making the chips, no more xboxes, and then finally oh yes we are Guess it shows how much people know as to what microsoft are playing at.

I still don't know if he's actually saying single units rather than the entire venture; that an xbox production costs more than the rrp more than he's saying 'we won't/haven't made money on the hardware'; he doesn't actually seem to be since he uses terms like "a break-even endeavour over the life cycle", which means actually making back the subsidises (full quote). On the other hand he says its still subsidised, but i can't think its hardware wise, they've got to be paying some huge f*ck off licensing fee i can't figure out. One things for sure, they haven't made money on the hardware, which is good (for us) i guess.

Its kind of interesting, if you find an article that prices the components let us know I want to see where the cash black hole is... I can only fathom the only way a hardware unit costs more than the rrp of that unit is that there's huge licensing fees to nividia (more than they are letting on), seagate and the drive makers and that they are counting stuff like marketing and shipping in the total. Maybe the chinese have a decent union and get good wages! Yeah right Otherwise i can't figure out how its possible that the priced components + construction can tally more than ?100... the maths doesn't work, can you get it to add up?

Well if the microsoft officer says its the case, it must be.
"Nobody will ever need more than 640k RAM!" Bill Gates, 1981.
"Windows 95 needs at least 8 MB RAM." Bill Gates, 1996.


Reading through though, the actual interesting bit of the article is


I want to know exactly how he expects they will be making a profit on that regarding the xbox360, as is my understanding, the design of the xbox2 is going to make it even harder to make money on the console until some years into production. At launch they are loosing loads more than they ever did on the xbox, and its not exactly as cheaply sourced as the xbox is. i think he's trying to sell to the shareholders here more than anything.

Same with the modchip comments:


Optimisitic

I don't think that's exactly true either. I think he's trying to sell a hope with comments like that.