MS to lose their @$$ on the x-box

[skywhr]

If they come threw with the $300 sales price, they will be losing $75.00 per unit sold, after 1 million sold thats alot of money something like $75,000,000.00
Not to mention what they have already put down major $$$ for advertising and development.

They are relying on games and accessories for profit.

 

[guyver01]

<< They are relying on games and accessories for profit. >>



as do most companies...

You know that playstation 2 video game you just bought for $40?? it cost them $0.10 to make.. $39.90 in profit..

all they have to do is sell alot of games... you figure... 1 million machines.. each person buys 4-5 games... thats 4-5 million games.. there's your profit..

 

[BigSmooth]

I believe this is the way all console game manufacturers operate. Sell the console at a loss, and make huge margins on the games. That's probably why the Dreamcast went under, actually, because the copying of games cut into the profitable part of the business.

 

[StageLeft]

PS2 costs more to make than it does to sell, although I heard that nintendo actually will make a profit on GC's!

 

[Modeps]

well, it actually costs a lot more to make a game guyver, perhaps .10 to actually get a copy out there on the CD/DVD, however you forget about pacakging, marketing for the specific game and the number one: GAME DEVELOPMENT.

 

[Viper GTS]

You know that playstation 2 video game you just bought for $40?? it cost them $0.10 to make.. $39.90 in profit.

Not quite. You're conveniently forgetting the months of development that went into making that game. Yes, the materials you got for your $40 probably cost less than $1 to produce, but the data contained on that disc cost a heck of a lot more.

Viper GTS

 

[Windogg]

Every wonder why those $49.99 inkjet printers chew through really expensive, low capacity cartridges so quickly?

Windogg

 

[HappyFace]

How would something like this work? Does the software company charge a set price per game produced?! (Say $2?) Or perhaps Microsoft purchases a one time license for several million dollars!? It'd be interesting to find out.

 

[vi edit]

<< Every wonder why those $49.99 inkjet printers chew through really expensive, low capacity cartridges so quickly? >>



That's why I tell people to just use the ink dry and buy a new printer. The cost of a new printer is only $15 more than the cost of the ink. E_bay the printer for $40 and you're set!

 

[ArkAoss]

windogg, you mean those, $40-70 print cartirdges??


business are realizing, the money is in consumables, soon you'll buy a car, but every year have to upgrade something, or pay subscriptions. you spend what 120k on a house. but then you pay maybe 5-7k a yr for 30 yrs on insurance, there's another 150k. or more. look at isp's and cell phones, free phone, but then your tied to their 20-50/month fees for a yr or 2.

 

[BigSmooth]

<< Every wonder why those $49.99 inkjet printers chew through really expensive, low capacity cartridges so quickly?

Windogg >>


I agree, printers are practically disposable at this point. It can be cheaper to just keep buying new printers than it is to keep buying the damn cartidges. Unfortunately, some companies now include special extra-low-capacity &quot;starter&quot; cartridges with the printer, which kind of defeats this strategy.

 

[jeffrey]

an analyst predicts microsoft will not turn a profit on xbox until 5 years out

 

$75 a pop is nothing. They will probably lose a lot more. I doubt these things will cost $375 to make, more like $400 - 450.

GameCube will be selling at, what, $250 at launch. PS2 will drop to $200 - $250 when by Christmas. That means Microsoft has to drop the price to at least $250 to compete, or at least offer a hefty rebate. That's anywhere from a $125 -200 loss per unit.

It's all part of the big game. They are not in this for profit up front. They want a piece of the console market. It's going to be an uphill battle for them and they know it. I personally don't think they they stand a chance.

 

[HappyFace]

Someone needs to invent a large compacity ink cartrige. It'd be very possible for a company to create ink holding devices that hold 3-4 times the current limit.

 

[Noriaki]

Well the way Sony does is it to lose money on the console and make it all back on licensing for games. Sony doesn't produce that many games themselves, but anyone that wants to make a Playstation game has to pay Sony to do so.

 

[Plantanthera]

Expected Consoles game market for the year 2002 would exceed $20 billions in software sales. Analyst expect MS to loses close to $300 millions on X-box sale, and MS looking to capture at least %5~7 of the market share in the first year of introduction.

%5 of 20 billions = 1 billions in retail sale.

If the production &amp; advertising cost of the game is $10.00, and MS sell the game at bulk price for $20.00 (retail at $40.00). That would translate to MS total net of $250 millions, very likely to break even in 1.5 years in software sales. According to market analyst, MS will brake even in software sales in 2 years or 2004.

 

[pidge]

You can preorder the XBox for $429.99 right now:

X Box Preorder

 

[HappyFace]

Shweeeeeeeet!!! If only I had extra money laying around...

 

[jeffrey]

hope that the final price is lower than that preorder price

 

[Windogg]

OT in OT:

Ever notice how you can no longer refill HP Inkjet cartridges? (Well you can refill it but it won't print) It's because there is actually a chip on the cartridge itself that counts the number of sweeps it makes across a page. After a certain number of back and forth movements, the cartridge disables itself. I know because the company I work for makes that chip. Expect more manufacturers to adopt this method to lock people into buying expensive consumables.

Windogg

 

[StageLeft]

Well damn, that sucks.

 

[Plantanthera]

That why I have lazer instead of inkjet printer

 

[BigSmooth]

I just notice the title of this thread says &quot;loose their @$$&quot;, not &quot;lose their @$$&quot;. What exactly are they up to over at MS? :Q

 

[AndrewR]

Damn, that's funny as hell, but he apparently fixed the typo in the title. LMAO!!!!

Somehow, if that were true, I wouldn't want to buy the X-Box. :disgust:

And, yes, it's the same basic strategy as inkjet printers and cellular phone providers. You build brand loyalty (whether forced or actual, ie., they MUST buy X-Box games to use it in this case), market penetration, and also rely on licensing and royalty payments which continue on for years after the initial outlay for the system itself. Sure, they might lose $X million their first year on sales of the box which they can write off against current profits from Windows and family. Then, if Windows and family start to decline in later years (which they are expected to do), X-box profits keep rolling in to boost their bottom line.

Never underestimate the power of corporate bookkeeping.

 

[Antisocial Virge]

<< That's probably why the Dreamcast went under, actually, because the copying of games cut into the profitable part of the business. >>



Yep...thats why Sony went under . Copying of DC games had nothing too do with DC going under.