Feeds

Xbox 360 costs third more to make than it sells for

And that's just the price of the parts

Build a business case: developing custom apps

It's widely believed that games console makers sell their hardware at a loss in order to get the retail price down to a level they believe consumers will be willing to pay, but any doubters must surely be convinced by market watcher iSuppli's attempt to strip down the Xbox 360 to find out how much its components cost.

According to the company's report, the top-of-the-range, hard drive-equipped Xbox 360 costs Microsoft at least $525 in parts alone. That's already $126 more than the retail price before the cost of assembly, packaging, distribution and marketing are added to the box-cost, and the retailers' cut is deducted from the price tag.

The big winners are IBM and ATI, whose products together account for 47.1 per cent of the Xbox 360's bill of materials (BOM), iSuppli estimates. IBM is supplying the console's 3.2GHz three-core PowerPC processor, which iSuppli claims costs Microsoft $106 a pop - 20.2 per cent of the cost of the console's complement of components. ATI's share is higher - 26.9 per cent - which it gains from its $141 R500 GPU, though it has to pay NEC some of that for the embedded DRAM it uses.

The next largest cost is the 512MB of Samsung DDR SDRAM ($65, or 12.4 per cent of the BOM), followed by the 20GB hard disk (10.4 per cent). You can see the full breakdown here.

iSuppli estimates that rising yields of the various chips used in the Xbox 360 will drive down costs going forward. But even if they don't, Microsoft almost certainly doesn't expect to make money on the console, passing lower costs on to the consumer by reducing the price of the console. Instead, it will be looking to recoup its hardware losses through software licensing royalties and the sale of its own Xbox 360 games. ®

Build a business case: developing custom apps

More from The Register

next story
The agony and ecstasy of SteamOS: WHERE ARE MY GAMES?
And yes it does need a fat HDD (or SSD, it's cool with either)
Apple's iWatch? They cannae do it ... they don't have the POWER
Analyst predicts fanbois will have to wait until next year
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Apple to build WORLD'S BIGGEST iStore in Dubai
It's not the size of your shiny-shiny...
Steve Jobs had BETTER BALLS than Atari, says Apple mouse designer
Xerox? Pff, not even in the same league as His Jobsiness
Apple analyst: fruity firm set to shift 75 million iPhones
We'll have some of whatever he's having please
TV transport tech, part 1: From server to sofa at the touch of a button
You won't believe how much goes into today's telly tech
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.