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Forums - Microsoft Discussion - Xbox One missteps may end up costing Microsoft $1 billion

Dr.Henry_Killinger on 08 June 2014
DeadBigfoot21 said:

But now they dont need to spend money for kinect since it isn't being bundled anymore. They will still keep producing more kinect devices but at a lower quantity. I am trying to find that article that says kinect costs more to make than the console. Dunno if its true though

The costs are minscule but they are still there. A greater issue is how this will affect the Kinect and the console in the long run.



In this day and age, with the Internet, ignorance is a choice! And they're still choosing Ignorance! - Dr. Filthy Frank

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Baalzamon on 08 June 2014

I'm guessing Kinect alone will have to have a pretty big write down, as it likely had some pretty substantial capitalized costs.

Besides that, there are a lot of costs to having a relatively botched start like this. Besides the fact they are reducing the price of the console by more than Kinect costs, new advertising, etc. comes with substantial costs.



Money can't buy happiness. Just video games, which make me happy.

Baalzamon on 08 June 2014
kowenicki said:

3 weeks.

it takes MS 3 weeks to make that much in PROFIT. Lol. 

this I'd taken from a Bloomberg interview by the way. Where he also says he thinks the ONE will regain the US.

It would actually be 2 weeks, but that is besides the point. For a stock that has been relatively stable for years, but has finally surged nearly 35% in the last year, this isn't the kind of news investors want to hear.



Money can't buy happiness. Just video games, which make me happy.

DeadBigfoot21 on 08 June 2014
Dr.Henry_Killinger said:
DeadBigfoot21 said:

But now they dont need to spend money for kinect since it isn't being bundled anymore. They will still keep producing more kinect devices but at a lower quantity. I am trying to find that article that says kinect costs more to make than the console. Dunno if its true though

The costs are minscule but they are still there. A greater issue is how this will affect the Kinect and the console in the long run.

Kinect costs "almost as much" as Xbox One to make, says dev

 

http://www.gamesindustry.biz/articles/2013-07-15-kinect-costs-almost-as-much-as-xbox-one-to-make-says-dev

 

Old article but still if this is true then that means microsoft can be making more money even at the $400 price tag. They can probably even make money if it was $350 or less. This will leave the xbox with a big price cut window. 



Baalzamon on 08 June 2014
DeadBigfoot21 said:
Dr.Henry_Killinger said:
DeadBigfoot21 said:

But now they dont need to spend money for kinect since it isn't being bundled anymore. They will still keep producing more kinect devices but at a lower quantity. I am trying to find that article that says kinect costs more to make than the console. Dunno if its true though

The costs are minscule but they are still there. A greater issue is how this will affect the Kinect and the console in the long run.

Kinect costs "almost as much" as Xbox One to make, says dev

 

http://www.gamesindustry.biz/articles/2013-07-15-kinect-costs-almost-as-much-as-xbox-one-to-make-says-dev

 

Old article but still if this is true then that means microsoft can be making more money even at the $400 price tag. They can probably even make money if it was $350 or less. This will leave the xbox with a big price cut window. 

Nah. If you look at the cost estimations, the total cost including Kinect, Xbox One, and a controller is around $471. Microsoft has said they will break even or make a slight profit. For Kinect to be almost as much as Xbox One itself would mean it is costing >$200 to manufacture alone, which is just plain unreasonable (especially considering the first Kinect retailed for $150). The more reasonable estimates I've seen put it at a $75-$100 manufacturing cost, indicating the $399 Xbox One does NOT have additional windows for price cuts.

I'd say this move has a lot more to do with the fact that Microsoft is ok with making even a little less per console in order to obtain market share and make money throughout the life of the console on that.



Money can't buy happiness. Just video games, which make me happy.

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DeadBigfoot21 on 08 June 2014
Baalzamon said:
DeadBigfoot21 said:
Dr.Henry_Killinger said:
DeadBigfoot21 said:

But now they dont need to spend money for kinect since it isn't being bundled anymore. They will still keep producing more kinect devices but at a lower quantity. I am trying to find that article that says kinect costs more to make than the console. Dunno if its true though

The costs are minscule but they are still there. A greater issue is how this will affect the Kinect and the console in the long run.

Kinect costs "almost as much" as Xbox One to make, says dev

 

http://www.gamesindustry.biz/articles/2013-07-15-kinect-costs-almost-as-much-as-xbox-one-to-make-says-dev

 

Old article but still if this is true then that means microsoft can be making more money even at the $400 price tag. They can probably even make money if it was $350 or less. This will leave the xbox with a big price cut window. 

Nah. If you look at the cost estimations, the total cost including Kinect, Xbox One, and a controller is around $471. Microsoft has said they will break even or make a slight profit. For Kinect to be almost as much as Xbox One itself would mean it is costing >$200 to manufacture alone, which is just plain unreasonable (especially considering the first Kinect retailed for $150). The more reasonable estimates I've seen put it at a $75-$100 manufacturing cost, indicating the $399 Xbox One does NOT have additional windows for price cuts.

I'd say this move has a lot more to do with the fact that Microsoft is ok with making even a little less per console in order to obtain market share and make money throughout the life of the console on that.

I dont know but i feel like the profit will be greater without kinect at $400 than having kinect at $500. But that is just IMO.



Aura7541 on 08 June 2014
kowenicki said:
Aura7541 said:
Not a huge deal to MS as an entire company. Really bad for the Xbox division.


sigh.  people really dont understand the article at all do they.

And I don't think you understand the article because if you did, you would have already corrected me. -_-

If MS can't beat the PS4 even after posting record setting profits quarterly, that's concerning.



Baalzamon on 08 June 2014
DeadBigfoot21 said:

I dont know but i feel like the profit will be greater without kinect at $400 than having kinect at $500. But that is just IMO.

If it honestly is $200 (it would have to be for that developer to be correct), I simply cannot grasp Microsoft making the console for <$250. The articles I'm reading indicate the console itself costs more like $332 to make, an additional $15 for the controller, and $124 for everything else (including Kinect). The article then goes on to say of that $124, $25 goes towards the power supply, $10 to other box contents, and $14 to assemble. So that leaves $75 for Kinect if it is $471 in manufacturing costs alone (not even factoring in advertising, shipping, etc.). Considering Microsoft themselves stated they will break even and or make a slight profit on each console...it simply isn't reasonable to think the Kinect is costing them even $100.



Money can't buy happiness. Just video games, which make me happy.

DeadBigfoot21 on 08 June 2014
Baalzamon said:
DeadBigfoot21 said:

I dont know but i feel like the profit will be greater without kinect at $400 than having kinect at $500. But that is just IMO.

If it honestly is $200 (it would have to be for that developer to be correct), I simply cannot grasp Microsoft making the console for <$250. The articles I'm reading indicate the console itself costs more like $332 to make, an additional $15 for the controller, and $124 for everything else (including Kinect). The article then goes on to say of that $124, $25 goes towards the power supply, $10 to other box contents, and $14 to assemble. So that leaves $75 for Kinect if it is $471 in manufacturing costs alone (not even factoring in advertising, shipping, etc.). Considering Microsoft themselves stated they will break even and or make a slight profit on each console...it simply isn't reasonable to think the Kinect is costing them even $100.

Yeah they said they are making money from every console even with kinect bundled at $500 so why wouldn't they be making money now that it is cheaper and kinect is removed?



Baalzamon on 08 June 2014
DeadBigfoot21 said:
Baalzamon said:
DeadBigfoot21 said:

I dont know but i feel like the profit will be greater without kinect at $400 than having kinect at $500. But that is just IMO.

If it honestly is $200 (it would have to be for that developer to be correct), I simply cannot grasp Microsoft making the console for <$250. The articles I'm reading indicate the console itself costs more like $332 to make, an additional $15 for the controller, and $124 for everything else (including Kinect). The article then goes on to say of that $124, $25 goes towards the power supply, $10 to other box contents, and $14 to assemble. So that leaves $75 for Kinect if it is $471 in manufacturing costs alone (not even factoring in advertising, shipping, etc.). Considering Microsoft themselves stated they will break even and or make a slight profit on each console...it simply isn't reasonable to think the Kinect is costing them even $100.

Yeah they said they are making money from every console even with kinect bundled at $500 so why wouldn't they be making money now that it is cheaper and kinect is removed?

Because they are lowering the price by $100 when Kinect wasn't costing even $100 to produce.



Money can't buy happiness. Just video games, which make me happy.