E3 2017: Microsoft Isn't Making Money On The $500 Xbox One X

Asked by BusinessIndier if Microsoft makes any money from Xbox One X hardware sales, Spencer said, "No." Pressed to clarify if this means Microsoft is taking a loss on each unit sold, Spencer responded, "I didn't answer it that way," declining to share more details.

"I don't want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business," Spencer said. "The money-making part is in selling games."

Another important element of this is that, over time, the price of components for any hardware come down, and this should be no different for the Xbox One X. This is to say, the economics of selling hardware, in this case Xbox One X, should get better for Microsoft over time.

You can get the full story here at BusinessInsider.

Taken from:

https://www.gamespot.com/articles/e3-2017-microsoft-isnt-making-money-on-the-500-xbo/1100-6450952/

I wonder what's driving up the costs. I doubt it's just the GPU, but also the cooling solution?

Most of the money comes from software, and XLG subscriptions.

Wow, I wonder what the cost of one to make is, then.

the R&D

the extra co-proccessors that offload the cpu (bigger cpu).

the gpu is bigger (more TMU's, more Shading units... not to mention 384bit bus (instead of 256))

The vampor chamber cooling solution.

The bigger cooling unit needed to cool a console that produces more heat.

The bigger power unit (a more powerfull console, will use more, and thus need a bigger psu).

the 4 gb extra ram, the ultra HD blu-ray drive (vs the ps4pro)

The complexity of the motherboard might be a reason too.

Most of it is probably from the differnce in Chip die size:

PS4pro : 232mm^2

Xbox One X : 360mm^2   (ms said this at E3)

I could imagine all these things added up, amount to the 100$ price increase vs the PS4pro.

Actually wouldnt be surprised if MS is takeing a small loss on each sold.

Meanwhile I think Sony are by now probably able to give the PS4pro a price cut and still sell at breakeven.

Brilliant strategy. Microsoft must be being ran by Jimmy James.

That's a weird call for a niche product. I mean, it's too expensive to have a major effect on user base, but they're going to rely on the extra software and other secondary revenue streams to make money off the system.

This is industry standard for almost any new console. Not sure why anyone is surprised...

No surprise there. I wonder if this means the "find a PC with this specs for $500" are all invalid now.

Can be interpretted to mean that whatever profit they might make from the hardware is so miniscule as to be negligible. He doesn't seem to mean it is being sold at a loss after all.