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nightsurge on 30 June 2011
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Baalzamon said:
nightsurge said:

@Baalzamon - What endimion said. I actually made a very detailed thread on the production costs of Kinect and the 360 a while back, but don't have time to search for it right now.  Also, it seems you read way too far into my post. You are assuming that I implied things that I did not, such as the assumption that I think MS will cut the price by $100. I'm not ruling out any possibilities, but what I can say is that MS most definitely can cut $100 off if they wanted and still be profitable on hardware, while Sony could not do the same.

And please refer back to 2008, where the 360 was down by over 1 million, and after their price cut soared to pass the PS3 by 1 million. That's a 2 million swing starting from September onward, and with MS predicting to be the #1 console WW this year, that is even more evidence to support they will be making some pretty big moves to boost sales this year.

Not trying to get into too much of an argument, but I have to ask, what exactly do you define as profitable on hardware?  Maybe we have different views.  If the only thing you are doing is adding up all the different parts of the hardware, and saying that is the cost, then yes, Microsoft can probably make a profit it they drop the price $100.  Company expenses associated with the hardware should be related to the profit though.  Putting the console together, shipping the console, advertising for the console, and administrative fees associated with the console.  I have a really hard time believing Microsoft would still be making a profit after a $100 price cut if you figured in all of these expenses.

I did take those costs into consideration when I made my estimates, but without having any idea what those costs come down to, I simply took a ballpark $20 per console for all those added manufacturing, shipping, advertising, storage, etc. costs. The 360 hasn't had a price cut since 2008, and has had some pretty extreme cost saving reductions made since then with the slim, combined 45nm cpu/gpu, smaller motherboard and psu, etc.

If they were to take a loss after the $100 cut, it would be very small and made up instantly with 1 or 2 games, or Xbox Live subscription.