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Slimebeast on 07 February 2010
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Alby_da_Wolf said:
Slimebeast said:
Alby_da_Wolf said:
Slimebeast said:
Alby_da_Wolf said:

We know, or at least we are told, that MS profits on XB360 HW. But is it overall or on each SKU? Does it profit only on Elites or on Arcades too?

Edit @Slimebeast: Obviously digging at Sony (or MS or Nintendo) with sense of humour is always welcome, we all know that hateboys aren't really able to use it

Dude, what's that supposed to mean? I was serious.

Irony can be used in serious speeches and you did it, nothing wrong about it and much better than hateful rants.

Sony managed to drop a $600 console down to $300 in less than three years, and still lose only $18.

Meanwhile MS has dropped his console only from $400 to $300 in four years. Yes, with a little profit per console sold, but that's negilible in the big picture because an X360 with HDD should cost only $200 by now.

No irony is hidden lol. It's the dry serious truth.

I thought there was irony for both.

Anyway, the different parts of the two consoles followed very different curves of cost reduction, blue laser, in particular, was subject to different and opposite forces, the natural cost reduction as production increases and process is refined, and occasional shortages tending to keep the price high, particularly when HD-DVD was still fighting the format war, then, after the format war victory, BD could really start the normal fast cost reduction of optical drives when they reach sufficient maturity. Relying on more standard components, XB360 followed a more regular curve, but its initial serious cooling problems added unpredicted costs, not only to repair or replace faultyunits, but to redesign mobos and cooling several times (CPU and GPU shrinking is normal during their life and after the costs of the shift they start producing savings, but it can be argued that the bigger initial process, having to be abandoned early for cooling problems, spread its costs over a smaller number of units, so it gave more fixed costs than predicted while the shrunk processes will follow their normal lifecycles).

Then there are other factors, some costs, like shipping and warehousing, are roughly fixed, so they weigh in proportion more on cheaper units. Not to mention that selling more in EU, with strong Euro and weak Dollar, is more profitable (or less costly when sales ar still at a loss) than selling more in USA.

Sony isn't winning by any means, but some things it needed, some really dangerous gambles, went eventually the right way, but now it needs to sell at least another 30M+ PS3 to keep the brand alive and respected, but at least another 40M+, instead, if it wants to recover the huge costs too.

MS is in a much better financial position, but weren't it for Halo, Gears of War and other exclusive huge successes and the huge success on it of some multiplatforms too, it would be unimpressive, even disappointing having lost its initial lead on Wii in less than one year. To better even more the financial aspect, XB360 enjoys the highest tie ratio, it's a really excellent SW seller.

That was an excellent analysis, especially the part about cost reductions. You're good at this.