Microsoft makes tiny profit on Xbox 360 hardware

By Justin Mann on November 20, 2006, 4:21 PM
Through reduction in manufacturing costs, Microsoft has managed to bring the cost of the Xbox 360 to a zero loss, if not a slight profit. With a reduction in manufacturing costs by nearly 40% since the console's release and perhaps streamlining of the process and bulkier orders, a $399 pricetag now nets Microsoft $75.70 – before the unit has been shipped however. While Microsoft themselves haven't announced whether or not they plan a price drop, this will definitely give them leverage in the console wars if they wish to make the console cheaper.

While they can't beat the Wii on price, they have a huge price advantage over Sony, which may be a key factor in determining supply and customer cost.

User Comments: 1

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buttus said:
Wow. A console that can actually becone profitable. I am actually impressed as most hardware ends up selling at a loss. Microsoft has played this very smart. Not only is their console making a profit, but they also don't see a need to reduce the price of the unit as Sony has put forth only a miniscule number of PS3's into the market space leaving many dissapointed consumers to instead spend their Christmas dollars on a 360. Add in some killer apps recently released for the XBox and you have one well executed business plan. Well done.
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