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Forums - Sales Discussion - Another price-cut for Microsoft? How much money are they losing with Xbox One?

Areym on 28 October 2014

Ms can probably afford to more money on the XBO than Sony can on the PS4. The bundles are great for consumers, so even if it looks "desperate" on behalf of MS, we still reap the benefits of the slow start of the XBO (COMPARED to the PS4)



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super6646 on 28 October 2014
MoHasanie said:
Sentient_Nebula said:
smroadkill15 said:
Why does it matter? If any of the three companies can suffer from a loss, it's MS.
You make it sound like a price-cut is a bad thing? The only thing that could be bad about the situation was if MS wasn't being competitive.

Of course MS can take the loss. But they're not in the console business to "win". They're in it to make money. It doesn't matter if Xbox One sells 10 trillion copies if it won't make money.

Yup, and its more important than ever for Xbox to be profitable. More losses will make the shareholders angry. 

Yeh and that way, the consumers won't buy the product! Anyway I estimate that production costs for each XBOX ONE is around 370$. Just cutting it to 349 already losses it 20$ a console. Plus with some bundles including two games, the royalties microsoft has to pay those developers is around 30$ for each game (since they don't make money off it, now thats my guess maybe its cheaper but thats what I say). Thus they lose UP TO 80$ a console (in the US). This isn't nearly as bad as the xbox 360 which was estimated to lose from 125-326$ a console. However for this generation, profitability won't be a main concern, but instead trying to rebuild its cripling fanbase.



Soundwave on 28 October 2014
Areym said:
Ms can probably afford to more money on the XBO than Sony can on the PS4. The bundles are great for consumers, so even if it looks "desperate" on behalf of MS, we still reap the benefits of the slow start of the XBO (COMPARED to the PS4)


There's no "probably" about it. MS has faaaaaaaaaaar deeper pockets than Sony could ever dream of. MS could buy Sony entirely full stop if they really wanted to. 



super6646 on 28 October 2014
brighat said:

Microsoft has to do something to get some momentum this Holiday season even if all previous attempts failed. If I were American, I would buy the XO Sunset Overdrive bundle at that price. However, I'm Canadian so I will have to wait. Regardless of them saying they won't give Canadians the $50 discount, I think they might change their mind or the retailers could match the U.S. price during Black Friday or Boxing Day.

Microsoft has been doing this all year, starting with Titanfall. I expect to see a Quantum Break bundle and a Rise Of The Tomb Raider bundle in 2015. Sony and Nintendo have been doing the same on occasion but it's the retailers who decide it in most cases. Sony does have the TLoU Remastered and Destiny bundles and Nintendo has Super Mario 3D World and New Super Mario Bros. U. Extra games on top of them are decided by the retailer.

It can be great for the people looking for a new console. I paid $200 for an 8 GB Wii U and got Mario Kart 8, NintendoLand and Skylanders with it.

You should be lucky its staying at 400$ in canada. We don't have the greatest dollar and yet we get deals similar to that of the United States



dyremose on 28 October 2014

Per unit im guessing around 20 dollars. Now this is not including whatever free game deals also available... What microsoft should have done is lowered it to 300 and not have spent 1 billion on minecraft. Instead use those funds to be better able to absorb price cut costs..



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Mr Puggsly on 28 October 2014
method114 said:
Mr Puggsly said:
Is this the first generation we don't anticipate losses?

The 360 and PS3 lost billions for various reasons for the first few years. I imagine the goal is to make it back down the road.


Yea that used to be the way it was done except Nintendo always made me on there consoles apparently. This generation though the goal was to make money on the console from the get go that way you end up with more money overall. MS has obviously had to revise that plan and with investors already complaining after what many felt was a great victory for 360 taking a huge step back like this can't be a good thing.


Well making money is still a possibility. It seems like the console manufactuers played it safe with specs. They don't seem to be sacrificing a lot of money with each unit sold.



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method114 on 28 October 2014
Mr Puggsly said:
method114 said:
Mr Puggsly said:
Is this the first generation we don't anticipate losses?

The 360 and PS3 lost billions for various reasons for the first few years. I imagine the goal is to make it back down the road.


Yea that used to be the way it was done except Nintendo always made me on there consoles apparently. This generation though the goal was to make money on the console from the get go that way you end up with more money overall. MS has obviously had to revise that plan and with investors already complaining after what many felt was a great victory for 360 taking a huge step back like this can't be a good thing.


Well making money is still a possibility. It seems like the console manufactuers played it safe with specs. They don't seem to be sacrificing a lot of money with each unit sold.

Eh I guess anything is possible I just think it's very very hard for them to still be making money while cutting the cost by $150 in one year. They removed the Kinect which I guess we can say is $100 and that's it. There's still another $50 dollars that I just don't see how they could have dropped the manufacturing cost by that much. Espicially when I quick google made it seem like DDR3 prices have increased not dececreased. Either way though making money off the console is never the goal it just make it easier to be profitable when every console sales adds money not makes you lose money.



bigjon on 28 October 2014

i am curious to see if Sony will respond.

I doubt the 50 bucks will make a huge difference. And dropping price temporary is a terrible tactic, people will refuse to buy your product when they see it at a higher price because they will just wait until the price drops again.



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iTechHeads on 28 October 2014
Soundwave said:
iTechHeads said:
Soundwave said:

Anyone else find these threads funny?

It's like a homeless guy worried about Brad Pitt losing money on a restaurant venture. Brad and Angelina are going to OK, don't worry, lol.

MS makes *billions* in profit every year, and will make *billions* in profit next year no matter what the XBox division does. MS can afford to take a temporary loss on the XB1 if they want to. This is the same company that spent like $7 billion buying Skype. 

Sony is the one that hasn't made even a dime in the last 7 years and is bleeding money like it's going out of style overall. Worry about them.

Why so defensive? No one is accusing Microsoft of going bankrupt. This is strictly about Xbox One and how much of a loss Microsoft is willing to take in trying to play catch-up to the PS4.(emphasis on trying)


MS can take a very large loss if they really cared to. If they really wanted to they could take a giant dump on Sony and buy out several key third party games and win this generation. If they *really* wanted to. This cut is maybe giving them a $20-$30 loss per unit in the USA ... that's nothing but peanuts for MS. 

In fact I called this price cut way beforehand. They were always going to go for it simply because they can afford to. 

No, they really can't. If they could do that they would have done it years ago. The best they can do is maketing deals with key 3rd party games, which they're already doing.

The only 3rd party games they can "buy-out" are startups like Titanfall or those which need more exposure like Tomb Raider. Microsoft cant buy Call Of Duty if they wanted to. It's not that simple.

I can guarantee you that Microsoft will never buy any "key" 3rd party games this gen. Yes, they have deep pockets but that really doesn't matter. Money doesn't buy you success. Just look at Zune and Microsoft Surface or Windows Phone. Why aren't these selling well? Microsoft has the money so what happened with these products? Why isn't the Xbox One outselling the PS4 with multiple price drops, free games, retailer promotions, Call Of Duty partnership, FIFA partnership, Assassin's Creed partnership, Titanfall exclusive, Sunset Overdrive exclusive and all those other launch exclusives? How come all of this isn't enough to outsell the PS4? It seems like Microsoft is doing everything they can to try to sell Xbox Ones. They keep pouring money into the Xbox One but it's just not working. You need more than deep pockets to sell a product. 



d21lewis on 28 October 2014

This is really Bizarro world! I'm sure of it. I know this is an Xbox One thread but do I got a PS3 with a free copy of MGS4, and free download for PAIN for about $100 less than MSRP AND a free $100 gift card. That console was being sold at a loss of about $200 (according to sources at the time) AT LAUNCH!! Was it embarrassing, then? Because I certainly wasn't embarrassed when I walked out of the store at midnight with my new 80GB PS3!