The September price drop was dramatic. But could the cost of production really dropped so much? I was under the impression that 360 had some quality components under its hood. How much do you think MS pays to produce a 360 arcade?

How about Wii/PS3 just to compare.

I understand it to be that they break even on the console and make their money back on LIVE subscriptions and software sales, but there are a lot of different opinions out there.

It's hard to know with MS, because even if they had a foreclosure sign in front of their HQ in Redmond, they'd still say that they were doing better than ever. So maybe they lose on the console, or maybe they don't?

Nope they break even (or something like +/- $2)

No one outside of MS knows for sure, but here is a likely scenario:

- They lose money on the Arcade unit (probably about $90)
- They approximately break even on the Premium 60GB unit
- They make money on the Elite unit (probably about $95)

However, these were closer to accurate estimates before the price drop. Microsoft could very well be losing money on each 360 sold on average.

The Arcade, Premium and Elite all cost about the same to manufacture.  The Premium has a hard drive, which is probably $10-$20 for MS to purchase, the Elite comes with a larger hard drive which likely costs exactly the same as the Premium's drive, and it comes with an HDMI cable which costs about 50 cents or a dollar for MS. 

So expect quite a loss on the $200 unit and quite a profit on the $400 unit.

If they break even on consoles, that probably means they are losing on the Arcade unit, but making that money back on the Pro/Elites.

As far as the PS3 and Wii go, we know the following from watching Sony and Nintendo financials:

(1) The PS3 is losing a lot of money per unit sold.  Almost certainly over $100.  Sony has been posting HUGE losses despite the PS2 making money and game licensing making money.

(2) The Wii is making quite a bit of money per unit sold.  Probably over $50.  Nintento has been posting HUGE profits even considering DS profits.

Yes that should be pretty accurate.

The Wii costs about $200, so there is a $50 profit in the US.  (See article from earlier this week)

PS3 was close to breaking even earlier this year, before the economic crisis.  It is probably a slight loss now.

Like others have said, M$ probably loses a small amount on the Arcade and makes money on the pro and even more on the Elite. I would guesstimate that they probably make a small profit overall ( all consoles added together ) but not much. The only way you can really tell is by going over their quarterly profits.

They only have a Entertainment and Devices division in their reports so you can't really see if the 360 makes a profit or not.