Microsoft Outsource Xbox 720 to Samsung !! ?

[bigjon]

SvennoJ said:
Xbox live is the cash cow for MS, next to peripherals. The console itself takes years before it starts making a profit.
Does this mean the 720 will be more expensive at the start, or will MS fork the extra difference? Or will we see a much smaller jump in hardware like Nintendo to make it profitable right from the get go?
It would be stupid for Samsung to sell it at base cost and assume all the responsibility.

I would imagine MS would contract the the production to Samsung.

Say it cost Samsung initially 375 to produce, MS would contract to buy them for 425 giving Samsung a profit on sales to Microsoft. Microsoft would them decide on the market price. They could go for a 349.99 introductory price, but MS would lose 75 per, then could sell for 399.99 and take a small loss at first. As the prices on production fall they would redo the contracts, most likely Samsung profit rate would rise, but the cost to MS would fall evenly, like after 2 years it only takes 250 to produce, MS may contract to buy them for 310, upping Samsungs profit per by 10, but still lowering their total cost substantially. At this point they could sell them for around the mass market price of 299.99 while only taking a minor loss.

Anyways I was obviously throwing out numbers, but the process is most likely very similiar to what would happen.