Kinect components cost $56 / £34

[greenmedic88]

kowenicki said:

greenmedic88 said:

scottie said:

I suspecty (assuming that analysis is true) that Microsoft is making a fairly healthy profit margin on the hardware, although that is not overly surprising - accessories have the highest profit margin of MS:EDD products by a considerable margin.

 

Also, isn't there a game bundled for that cost?

Proprietary HDDs, proprietary WiFi adapters, controllers; definitely. Those 1st two are among the most inflated in terms of supply/manufacturer's cost to actual MSRP.

Although I'm still inclined to think profitability on KInect peripherals is second to establishing it as a platform within a platform with the appropriate software sales. 

Call me a cynic, but I more or less believe the initial $149 MSRP is just an inflated price to help pay for the $500m marketing campaign. You're basically paying extra for the advertising that went into selling you the product. 

Thats not cynical, thats common business practice.  Who doesnt do this?  All products cost more early on to pay for R&D, Marketing etc.

 

That's about $50 more than what they could have feasibly sold Kinect for. 

That $150 price is based upon an estimate that they will reach 100% sell through at the max rate of production MS could deliver to retail through the holidays given the amount of time required to have the product ready for a holiday season 2010 launch. It was a tight window as R&D continued very close to the start of production of the finished product. 

In short, I think MS projected product shortages over the holiday launch season, even at max production (for the amount of time they had available to set up initial production) which gives them the leverage to charge more than what they might have had they had more time to set up production at higher rates. 

And MS doesn't usually do this. Everyone knows they initially sold the Xbox 360 at a loss despite the first year shortages.