Despite Microsoft officials insisting that the retail price of the Xbox 360 covers all manufacturing costs, two reputable market analysis firms in the United States have a different opinion…
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The main circuit board of the Xbox 360 |
They assert that Microsoft is selling the Xbox 360 below cost and will incur significant losses from this grand Xbox 360 venture.
Shortly after the launch of the Xbox 360, the market research firm Portelligent dissected a stripped-down version of the console priced at $300 to estimate its manufacturing cost. After carefully examining all components of the device, Portelligent experts concluded that the minimum cost to produce a stripped-down Xbox 360 is approximately $310 per unit. This means Microsoft is losing at least $10 on each stripped-down Xbox 360 sold.
Another market research company, iSuppli, conducted a similar analysis, but focused on the Xbox 360 Premium, which is the fully equipped version of the console. After dissecting the full Xbox 360, iSuppli estimated the minimum hardware cost of the Xbox 360 Premium to be around $525, significantly exceeding Microsoft’s retail price of $400.
Analysts suggest that Microsoft is not solely bearing the losses from selling below manufacturing cost, as component suppliers may sell parts to Microsoft at very low prices. Additionally, Microsoft claims it is willing to accept a minor loss on hardware costs, offsetting this through massive game sales.
The most expensive components of the Xbox 360 are primarily the electronic chips inside the console. iSuppli estimates that the total value of the electronic chips in the Xbox 360 Premium is approximately $340. The central processing unit (CPU) of the Xbox 360 is an IBM PowerPC processor with three cores, costing about $106. The graphics processing unit (GPU) from ATI is the most expensive chip in the Xbox 360, priced at $141.
Other devices, such as the disc drive, DRAM memory, wireless device, gamepad, and various auxiliary components, easily push the total cost of the Xbox 360 to over $500.
iSuppli calculates that IBM can sell PowerPC processors to Microsoft at a particularly low price, hoping to become the dominant supplier of central processing units for renowned professional gaming consoles. The PowerPC chip is also utilized by Sony and Nintendo in their latest gaming consoles, such as the PlayStation 3 and Revolution.
In June 2006, Sony will officially launch the PlayStation 3, which boasts superior technical specifications compared to the Xbox 360. Interestingly, Sony has introduced the PlayStation 3 at a price considered “shockingly cheap,” set at $300 and $400, the same price points as the Xbox 360.
HOÀNG KIM ANH
