As for your above comment on Xbox, if anything, this gen has proven that MS isn't looking to take a loss on HW.
That is a really, really stunning thing to say (I have another word for it in my mind but we'll stay civilised). I don't know where you are living but at least in Europe (and my guess is pretty much everywhere), MS has lost a staggering amount of money if we look at the hardware only. My guess the total losses over the lifetime of the XBox could have reached anywhere from $2B to $4B.
Let's look at just a few problems:
1. XBox manufacturing. For the past few years (actually less than two years since launch), there hasn't been a week when you couldn't buy an XBox over here for around $199-$229 (and those usually have been bundles: 1-4 games, 3 months of free gamepass). There is NO WAY an XBox could ever have even been manufactured for less than that (I do not know what the store margins are/were for those units, but it's not $zero). Btw, XBoxes (not counting X1X, but that one actually required a complete redesign of the SoC, so add $80-100Mio here) are more expensive to manufacture than PS4s, judging by comparing motherboards). As a very rough guess, at the very least a $50 loss on every unit sold. For how many millions of units worldwide?
2. Kinect2. Kinect was and still is an engineering masterpiece, probably the best electronics device ever designed. It cost a shitton in r&D and to manufacture it (it has three special chips which require zero defects, and other top-notch components). I have never understood why MS has never produced a standalone version of its Kinect2. There are a lot of researchers and probably photographers who would have bought such a device. If you tried to buy a tof chip, you'd still pay several times the price of the entire Kinect2, even today (actually a single tof chip with lesser resolution was in the $8000 region when Kinect2 hit the market. I remember the research group I was in once had around $50000 free to spend on equipment and the choice was between a tof system and a dye laser system (the boss bought the laser system). I'd estimate the manufacturing costs of the Kinect2 at around $200 simply by looking at all its components. Kinect2 was/is a high-end product, not a cheesy device like the original Kinect. This also puts to rest the myth that the $499 XBox was more expensive than the $399 PS4 - in reality, the XBox was much cheaper.
So let's make very rough guess what the Kinect2 fiasco cost for MS. Kinect2 was intended to go with every XBox sold, certainly 10mio chipsets were ordered for its first batch of units. How many were actually sold? 1 Million? 2 Million? Let's be generous and say 4 Million. That leaves 6 Million chipsets for the dump. Very roughly a $1B loss.
3. Software costs for the backwards compatibility program. That is an ongoing thing and I have no idea how large that group is that made the crossassembler/360os on XBox and fine-tunes it for every game they put on the gavel. Surely a few millions every year is spent on this.
4. There are more things that I keep wondering about, but probably not really hardware related. For example, how much does the XBox group pay the server group for using, maintaining, manning, upgrading, whatever else is involved, for the Azure server infrastructure all over the world. I have a sneaky suspicion that they have been freeloading on it, at least up to the point when Nadella made a few changes to the way things went up to that point. We will never know of course.
Phew, this rant has been much longer than I intended, but there are so many things thrown around in foums which are just plain wrong (other forums are even worse, though). One thing is absolutely sure though: On hardware, XBox is deep in the red.
Last edited by drkohler - on 16 February 2020