For all those who are wondering about how Microsoft can afford such cuts.
Isuppli lists the cost of a 20gb Xbox 360 @ 320 and the price of the Arcade was ~$280.
November 2006 so thats the Zephyr model I believe.
Note1: The cost of the motherboard is very steep.
This is the cost total cost for a fresh mainboard with everything attached.
Cost scaling since then silicon components:
GDDR3: Unlike the PS3 - the Xbox 360 uses commodity memory, so the costs for this have likely halved in the last two years. GDDR3 is used extensively. The 8 512 mbit chips are still being used in mass production for desktop GPUs.
CPU: Die size has halved. 50% smaller = 50% cheaper if you take into account heat sink cost reductions offsetting the fact that the testing/packaging costs do not scale and assuming a similar yield which is reasonable.
GPU: Costs would have more than halved assuming the same scaling. They are integrating into one chips where there was once two. So the reduction in testing/packaging/manufacturing/heatsink costs are quite significant. Also it removes an important point of failure so the reliability/suport costs would be far lower.
Motherboard: The power supply components on these motherboards are expensive. A typical desktop motherboard has to supply only a CPU as GPUs come with their own power regulation circuitry. An Xbox 360 motherboard is much more complicated than your standard motherboard as it contains the ram/gpu/cpu all on the same board- these changes reduce that complexity.
Cost scalings.
If everything else remains the same except the motherboard costs are halved then according to the above table the Xbox 360 Arcade would cost $180 to manufacture and the 60gb would cost $230 to manufacture. The power supply is probably $5-10 cheaper but I didn't bother to include it.
The base model would likely cost ~180 and the Premium model would likely cost ~230 to manufacture.
Tease.
