Microsoft says it won't be making money on the $500 Xbox One X

[midian182]

On November 7, Microsoft is releasing its mid-generation console refresh, the Xbox One X. This 4K-capable machine may be more powerful than Sony’s rival PlayStation 4 Pro, but at $499, it’s also around $100 more expensive. Microsoft, however, claims it won’t be making money on the sale of the upcoming console.

Speaking during a recent interview with Business Insider, head of Xbox Phil Spencer was asked if Microsoft makes any money selling the Xbox One X at $500. While he didn’t specifically say the company was making a loss, Spencer said: "I don't want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business.”

Spencer added that Microsoft would be relying on games to make up the Xbox One X profits. “The money-making part is in selling games," he said.

It’s worth noting that as the costs of manufacturing the new console inevitably fall, Microsoft will start making more money on each unit sold. The price of the Xbox One X itself will also eventually decrease, and more units are expected to sell as the popularity of 4K/HDR TVs increases.

While many people were disappointed with the Xbox One X’s $500 tag, it’s something most analysts were expecting. Some commentators thought it might be higher, and Microsoft even said it was “proud of the pricing.”

“The fact is we designed this to be a premium product that has the most power, the most performance that has ever been seen, no compromises; true 4K gaming,” said Aaron Greenberg, head of Xbox games marketing.

$500 is a lot of money, and online reaction to the machine has been pretty mixed. We’ll have to wait a few more months to find out just how popular the “most powerful console on earth” becomes.

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https://www.techspot.com/news/69728-microsoft-wont-making-money-500-xbox-one-x.html

 

[Puiu]

It was pretty obvious that they would not make much money off the hardware. Even at 500$ it will be very hard to sell. It will continue to be a niche product for quite some time.

 

[Nobina]

Weren't profits always mainly from games? That's what I remember hearing back when Xbox 360 was new.

 

[Uncle Al]

Yep .... they give away the machine then make it up on the games which average well over 500% per game and seriously .... when was the last time you actually believed ANYTHING said by Microsoft or one of it's representatives. You got a better chance of finding an honest congressman and we know how THAT goes .....

 

[gusticles41]

Weren't profits always mainly from games? That's what I remember hearing back when Xbox 360 was new.

Games and accessories for sure. Controllers, headsets, battery packs, cables...

 

[Kibaruk]

I think this has been all the way back from the original "next gen console".

 

[Kenrick]

They need to make a drama series starring Phil Spencer. I nearly cried on this article.

 

[Squid Surprise]

This is a clickbait title.... nowhere did MS say it wasn't making money on the hardware... THEY ARE!!! Just not very much.... And they WILL make more money as production becomes cheaper (this is even mentioned in the article)....EVERY console has relied on its games to generate most of its revenue, this is nothing new.

This is a good article, with a misleading title...when did this become a clickbait site?

 

[Kibaruk]

This is a clickbait title.... nowhere did MS say it wasn't making money on the hardware... THEY ARE!!! Just not very much.... And they WILL make more money as production becomes cheaper (this is even mentioned in the article)....EVERY console has relied on its games to generate most of its revenue, this is nothing new.

Well... it might cost them 5 in hardware and sell it in 10 but they also have to take into consideration the production lines, R&D, Marketing, so on and so on, so they are selling at 10 and making maybe 0.5... who knows.

This is a good article, with a misleading title...when did this become a clickbait site?

This is a tricky question...

 

[ZackL04]

Gonna be a hard sell, I assume the ps4 pro will get a price drop. If so, it will probably be $150 cheaper and basically do the same thing cept play 4k movie discs (who's paying $30+ for a movie anyway??)

 

[Nero7]

What many don't seem to get is that this here is the next gen console.

Yes it isn't presented as such, yet.

Fact is the Xbox one is already at its limits. Most of its games have to resolve to 30fps with dips below. 1 year from now no one is gonna want to make games for the xbox one, they'll want a more powerful platform and thats where the xbox one x will step in.

Sony screwed their players with the PS4 Pro and people will realise that once they have to announce the PS5.

The xbox one x might not look very appealing to many right now, but it sure will in a year or two. The full backwards compatibility reaching to some degree even down to the 360 and apparently even to the first xbox is really nice.

And whats up with people claiming that the xbox doesn't have any games??? They all went out there and got the switch which has nothing apart from Zelda.

It wouldn't surprise me if Microsoft is gonna make quite a lot of money with the xbox one x in the long run.

 

[Footlong]

I think the problem with Xbox One X is the lack of a killer game. This game should work as a flagship. Hardware enthusiast are not such a big of a crowd to justify this heavy investment.

 

[Johnnyblaze1957]

Gonna be a hard sell, I assume the ps4 pro will get a price drop. If so, it will probably be $150 cheaper and basically do the same thing cept play 4k movie discs (who's paying $30+ for a movie anyway??)

I do.

 

[ZackL04]

I do.

Well then I wish I was a billionaire like you too. I see no other reason for anyone to waste that kind of money on movies...

 

[captaincranky]

Isn't this pretty much the same scam, (er, I mean 'strategy'), as ink jet printers? You get the printer below cost, then pay through the nose for ink the rest of its life.

I used to buy a "give away printer" every Black Friday at Best Buy, then throw it away the next Thanksgiving day (and the cycle repeats).

Anyway "poor M$" is losing money selling its new gaming console. The solution there is, (assuming you want to help them out), buy two of them, maybe they can make it up their 'losses' with 'volume'.

 

[Johnnyblaze1957]

Well then I wish I was a billionaire like you too. I see no other reason for anyone to waste that kind of money on movies...

It's got nothing to do with wasting money as I like all the extras that come with having discs and there are things call sales. Just because you don't buy discs why shouldn't I and if my Internet is crap compared to a lot of countries discs are the much better option.