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Forums - Sales Discussion - Another price-cut for Microsoft? How much money are they losing with Xbox One?

Deeds on 29 October 2014
Playstation_prophet said:

I don't want to use the word "embarrassing" but didn't they just bundle a game with the system last month. I don't understand. Why not give it time? How much are they losing per console sold? Are they losing money per console sold? What do investors think about this?

 

What was the original price of WiiU? Price-cuts?

What was the original price of Dreamcast? How many price-cuts?

Again, Microsoft was going to buy Yahoo for 48 billion dollars. I repeat, 48 BILLION DOLLARS. Microsoft can subsidize the Xbox indefinately if they choose to do so, so the losses they make from this price cut means very little to them. Whether this price cut will lead to bigger sales, which is the objective, is yet to be seen.



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Devil_Survivor on 29 October 2014
Sentient_Nebula said:
smroadkill15 said:
Why does it matter? If any of the three companies can suffer from a loss, it's MS.
You make it sound like a price-cut is a bad thing? The only thing that could be bad about the situation was if MS wasn't being competitive.

Of course MS can take the loss. But they're not in the console business to "win". They're in it to make money. It doesn't matter if Xbox One sells 10 trillion copies if it won't make money.


They have never made any money off Xbox according to reports last year and they lost something like 2 billion since the Xbox venture lanuched. They are very rich company and take losses but, why keep doing it?



 

Deeds on 29 October 2014
Devil_Survivor said:
Sentient_Nebula said:
smroadkill15 said:
Why does it matter? If any of the three companies can suffer from a loss, it's MS.
You make it sound like a price-cut is a bad thing? The only thing that could be bad about the situation was if MS wasn't being competitive.

Of course MS can take the loss. But they're not in the console business to "win". They're in it to make money. It doesn't matter if Xbox One sells 10 trillion copies if it won't make money.


They have never made any money off Xbox according to reports last year and they lost something like 2 billion since the Xbox venture lanuched. They are very rich company and take losses but, why keep doing it?

Who knows? But the point is that they can do it. By the way, Microsoft is not the only filthy rich company in this situation. Intel is losing billions of dollars every year on their smartphone and tablet business, and they are not phased by it.



starcraft on 29 October 2014
method114 said:
walsufnir said:
Protendo said:

... the price of DDR3 actually increasing since launch ...

Don't use prices for consumers to infer what hardware manufacturers pay for chips/parts.

Actually that's a great way to tell if prices have increased across the board then they increase for everyone. Unless wer'e talking a few cents or something then no MS probably pays the same. From a quick google I did though prices seem to have gone up anywhere from 20-40%. I think MS is paying more.

MS learnt from their Nvidia experience in the 6th gen. They will have prices for standardized parts, expected efficiency improvements in cost etc locked in for months and years through contracts with suppliers. If the cost of DDR3 went up for them it will have been a tiny increase. Don't underestimate the benefits to manufacturers of steady (if not highly profitable) supplying for consoles.



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starcraft on 29 October 2014
bigjon said:
i am curious to see if Sony will respond.

I doubt the 50 bucks will make a huge difference. And dropping price temporary is a terrible tactic, people will refuse to buy your product when they see it at a higher price because they will just wait until the price drops again.

Its a fantastic tactic.

The price will stay down, if it goes back up it will be intermittent. But I think come January they'll say 'the response to our new price point has been so overwhelming we've decided to keep it.' 

In the meantime, people jump on, afraid the price may actually increase again.



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Devil_Survivor on 30 October 2014
Deeds said:
Devil_Survivor said:
Sentient_Nebula said:
smroadkill15 said:
Why does it matter? If any of the three companies can suffer from a loss, it's MS.
You make it sound like a price-cut is a bad thing? The only thing that could be bad about the situation was if MS wasn't being competitive.

Of course MS can take the loss. But they're not in the console business to "win". They're in it to make money. It doesn't matter if Xbox One sells 10 trillion copies if it won't make money.


They have never made any money off Xbox according to reports last year and they lost something like 2 billion since the Xbox venture lanuched. They are very rich company and take losses but, why keep doing it?

Who knows? But the point is that they can do it. By the way, Microsoft is not the only filthy rich company in this situation. Intel is losing billions of dollars every year on their smartphone and tablet business, and they are not phased by it.

Well lost of face is what think is behind it for both. They don't want to admit  that they have a failed product on thier hands. I guess as long the overall company is profitable then its fine.



 

TheWPCTraveler on 30 October 2014
starcraft said:
bigjon said:
i am curious to see if Sony will respond.

I doubt the 50 bucks will make a huge difference. And dropping price temporary is a terrible tactic, people will refuse to buy your product when they see it at a higher price because they will just wait until the price drops again.

Its a fantastic tactic.

The price will stay down, if it goes back up it will be intermittent. But I think come January they'll say 'the response to our new price point has been so overwhelming we've decided to keep it.' 

In the meantime, people jump on, afraid the price may actually increase again.

I'm afraid that Microsoft has gotten too used to dropping price to prop up Windows Phone and Surface sales, though, to realize this.

But, yeah, this is a great tactic to boost sales - but will net you bad PR, which Microsoft is trying to rectify.



 
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DonFerrari on 30 October 2014

Probably losing 20-30 on each Hw plus 30 per game bundled. So in the bundle they may be losing 80 bucks.



duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"

http://gamrconnect.vgchartz.com/post.php?id=8808363

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Uabit on 30 October 2014

I don't think they are losing money, the console has such a weak hardware, even Sony selling a more powerful hardware for 400$ stopped losing money a few months ago...

They don't lose money + they start earning money very fast with the online memberships.



method114 on 30 October 2014
starcraft said:
method114 said:
walsufnir said:
Protendo said:

... the price of DDR3 actually increasing since launch ...

Don't use prices for consumers to infer what hardware manufacturers pay for chips/parts.

Actually that's a great way to tell if prices have increased across the board then they increase for everyone. Unless wer'e talking a few cents or something then no MS probably pays the same. From a quick google I did though prices seem to have gone up anywhere from 20-40%. I think MS is paying more.

MS learnt from their Nvidia experience in the 6th gen. They will have prices for standardized parts, expected efficiency improvements in cost etc locked in for months and years through contracts with suppliers. If the cost of DDR3 went up for them it will have been a tiny increase. Don't underestimate the benefits to manufacturers of steady (if not highly profitable) supplying for consoles.

Yea I agree I think there would be some sort of contract setup to make sure they don't get to much of an increase. In all honesty though I know nothing about these type of situations so I could be completely off about the whole thing. This is just me taking a guess basically.