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gergroy said:

Also, while the gamecube did use a proprietary minDVD technology, it was still a lot cheaper.  Not only was it cheaper to manufacture than the standard dvd drives, but it also cut out the dvd forum that would have charged a fee of 20 per unit just to have dvd technology included.  Not to mention the license fees for each disc printed, etc.  That dongle was Microsofts way of trying to recoup some of the cost going to the dvd forum.  The dvd hardware was already included, all the stupid dongle did was unlock it and let you use a remote.  

From a strictly manufacturing perspective, it probably was a cheaper drive to manufacture simply because it was smaller and top loading (even though it was still using the same underlying DVD tech as the others).  But at the same time you have to factor in that it was using a proprietary Panasonic version of that DVD tech, and I think all their drives were therefore made solely by Panasonic.  By comparison, looking at the original Xbox for example, MS was free to shop around and switched the manufacturer of their DVD drive several times from Phillips, Thomson and Samsung (and a lesser known Hitachi model) finding lower manufacturer prices.  

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I also agree about the license fee though much of the DVD Forum fee was paid to patent holders of the tech, and Sony being one of the larger patent holders was able to offset the price of the DVD drive that way.