Xbox One At $500, Microsoft Says The Xbox One Will Break Even Or Make A Profit

[SiNAR 212]

Forbes has an article regarding the profit and loss on each Xbox One system sold. Microsoft is saying that at $500 dollars that the Xbox One will break even on each system sold or make a profit. It also goes into w This is good!!! Means that they can spend more money on the system and getting more games for the system. They really worked their money out this time.

After months of policy reversals from Microsoft MSFT -0.12%, there’s only one major difference between the Xbox One and the PS4 at this point, the price. The PS4 retails at $399 while the Xbox One is $499, and comes with the Kinect sensor, which is likely the bulk of the additional cost.
....

So right now, if they did somehow cut the price to $400, they’d probably be losing close to $100 on each console. The concept of a system being a “loss leader” to rack up a high install base isn’t unheard of, but that would be a pretty big loss on each console.

What’s not clear, however, is what the margin would be if Kinect was not a factor. The original Kinect cost $150 by itself, so it seems reasonable that the new one would cost nearly $100 in manufacturing costs, or close to it. Again, if they removed it and sold it separately, they might be able to get to $400 maintaining the same margins, but it’s becoming clear they don’t really want to do that.

The launch of the console is two and a half months away, and it seems at this point Microsoft is going to stick to their guns and ensure every Xbox One owner gets a Kinect. I’m sure they’re hoping the early adopters’ evangelism after use will convince others to want one as well, and it will become the norm.

The biggest question here is if the Kinect will be worth all this. Kinect 2.0 has many improvements over its predecessor, but that doesn’t necessarily mean it’s finally the revolutionary piece of technology Microsoft wants it to be. The biggest applications we’ve seen for it on the Xbox One so far have been input and channel switching. Cool, but hardly a must have at this point. And the Kinect-infused games announced for the system so far are the usual mix of dance and fitness titles, with only a few outside of the box that sound interesting like Ubisoft’s Fighter Within.

All this said, while the price disparity may lead to fewer sales for Microsoft initially, in the long run, I don’t think this will be as big of a misstep as PS3′s $600 launch.

Source - http://www.forbes.com/sites/insertc...he-xbox-one-will-break-even-or-make-a-profit/

 

[bifftape]

Good that they got the logistics worked out. I hope it doesn't mean they will be more wont to drop the price. I guess we'll have to wait and see for that, though I don't anticipate that they'll need to start selling consoles at a loss any time soon.

 

[KN1GHTMARE]

Yea I read this the other day. I'm glad, the more profitable they are the better the future of our console of choice looks.

 

[alycat32]

Agreed, as much as I hate spending that much, I'd rather they keep making money so they keep putting out quality stuff.

 

[Sugarhill]

So, for all the people that are hoping for a price drop in the next two years, you can forget it. They have absolutely no reason to do it and I doubt very seriously if they will. Nor, will they have the need to sell a version without the Kinect. This is one thing that they did intelligently from the beginning and fan outrage can't get them to change.

 

[SiNAR 212]

So, for all the people that are hoping for a price drop in the next two years, you can forget it. They have absolutely no reason to do it and I doubt very seriously if they will. Nor, will they have the need to sell a version without the Kinect. This is one thing that they did intelligently from the beginning and fan outrage can't get them to change.

Exactly, and it WILL play out to their advantage. Just watch and see.

 

[bifftape]

So, for all the people that are hoping for a price drop in the next two years, you can forget it. They have absolutely no reason to do it and I doubt very seriously if they will. Nor, will they have the need to sell a version without the Kinect. This is one thing that they did intelligently from the beginning and fan outrage can't get them to change.

The only reason they would ever want to do that is if it bombs in sales. $500 will leave some players priced out, but not enough that they'll lower the cost. People are going to buy this console in droves, but the off chance that this assumption reverses polarity is a scenario they do need to be prepared for.

 

[Sugarhill]

But, it's not going to bomb in sales. Nowhere near it. You have the people who will pre-order, you have people like me that are just broke, but will get it, you have people that just don't want to deal with Day One, but will day ten, Christmas gifts and Hannukah gifts and those are the actual gamers. All of the media junkies will jump on this and Live and then start getting dance games and exercise games and core games.

They are able to pull the gamers over to all of their media stuff and they are going to pull their media people far enough over to their games. It will explode, but it won't bomb.

 

[wowtgp]

Well, they should have dropped the kinect and not make it mandatory. Sony was really clever with it.

 

[KN1GHTMARE]

Well, they should have dropped the kinect and not make it mandatory. Sony was really clever with it.

Disagree i think having Kinect in every box will make it easier for developers to integrate. Smart move on their part.

 

[Sugarhill]

No, Sony was foolish with it. When the Kinect really takes off and it will, you will have a far greater chance of developers deciding to go exclusive because they know that every One owner will be able to play their game as soon as they unwrap it. Or, you'll have games that owners of both units will buy for the One over the 4 because it has more nuances to it. For example, when Madden allowed you to call plays at the line on the 360 because of the Kinect, you couldn't do that with the PS3 version.

The same thing will most likely happen with Splinter Cell: Blacklist. If Call of Duty starts incorporating Kinect into their next few iterations, then it will be about more than just timed exclusives that Microsoft is extracting from them.

No, Microsoft went long term with its strategy, Sony panicked and went short term like they always do. For these last two consoles, they've been on the offensive and losing money that was there to be had because they wanted to be the anti-Xbox. Free PSN, but they wanted paid online gaming, finally they snuck it in this time. Oh, we don't have a camera, it's $100 less! Well, when you start seeing less games or certain games either needing a camera or not being developed for Sony, you'll see how smart they were.

PS4 owners are not getting the better deal overall. The only thing they have to crow about is the free games that they have on loan. But, my games, even though they are old, are mine to keep forever, Live membership or not. Microsoft can start putting out newer and better games for Games with Gold, but Sony is not going to reverse course and give those games away permanently.

As I said from the moment the One was announced, that is the console with potential and growth, the PS4 is limited.

 

[KN1GHTMARE]

No, Sony was foolish with it. When the Kinect really takes off and it will, you will have a far greater chance of developers deciding to go exclusive because they know that every One owner will be able to play their game as soon as they unwrap it. Or, you'll have games that owners of both units will buy for the One over the 4 because it has more nuances to it. For example, when Madden allowed you to call plays at the line on the 360 because of the Kinect, you couldn't do that with the PS3 version.

The same thing will most likely happen with Splinter Cell: Blacklist. If Call of Duty starts incorporating Kinect into their next few iterations, then it will be about more than just timed exclusives that Microsoft is extracting from them.

No, Microsoft went long term with its strategy, Sony panicked and went short term like they always do. For these last two consoles, they've been on the offensive and losing money that was there to be had because they wanted to be the anti-Xbox. Free PSN, but they wanted paid online gaming, finally they snuck it in this time. Oh, we don't have a camera, it's $100 less! Well, when you start seeing less games or certain games either needing a camera or not being developed for Sony, you'll see how smart they were.

PS4 owners are not getting the better deal overall. The only thing they have to crow about is the free games that they have on loan. But, my games, even though they are old, are mine to keep forever, Live membership or not. Microsoft can start putting out newer and better games for Games with Gold, but Sony is not going to reverse course and give those games away permanently.

As I said from the moment the One was announced, that is the console with potential and growth, the PS4 is limited.

Well said! Couldn't agree more!

 

[BlackSolaris]

If only this price would help them produce some quality first party titles, then i think it's worth it. Because i don't think a headset, Kinect 2.0 and what comes with the console is really worth that amount of money. PS3 wasn't at the beginning, Xbox One won't be the same.

 

[Sugarhill]

Is Forza 5 worth $500? No, but is sitting around on my 360 grinding out Forza 4 while everyone else is playing Forza 5 going to be that much fun? Double no!

 

[sc_shark]

No, Sony was foolish with it. When the Kinect really takes off and it will, you will have a far greater chance of developers deciding to go exclusive because they know that every One owner will be able to play their game as soon as they unwrap it. Or, you'll have games that owners of both units will buy for the One over the 4 because it has more nuances to it. For example, when Madden allowed you to call plays at the line on the 360 because of the Kinect, you couldn't do that with the PS3 version.

The same thing will most likely happen with Splinter Cell: Blacklist. If Call of Duty starts incorporating Kinect into their next few iterations, then it will be about more than just timed exclusives that Microsoft is extracting from them.

No, Microsoft went long term with its strategy, Sony panicked and went short term like they always do. For these last two consoles, they've been on the offensive and losing money that was there to be had because they wanted to be the anti-Xbox. Free PSN, but they wanted paid online gaming, finally they snuck it in this time. Oh, we don't have a camera, it's $100 less! Well, when you start seeing less games or certain games either needing a camera or not being developed for Sony, you'll see how smart they were.

PS4 owners are not getting the better deal overall. The only thing they have to crow about is the free games that they have on loan. But, my games, even though they are old, are mine to keep forever, Live membership or not. Microsoft can start putting out newer and better games for Games with Gold, but Sony is not going to reverse course and give those games away permanently.

As I said from the moment the One was announced, that is the console with potential and growth, the PS4 is limited.

i dont like allot of posts but dang thats a good one. nice perspective. u get a like from me sir.

the interview i posted in the news/rumor hits on this allot.. how microsoft thought the industry was further along than it is and thats why they had the things in place they did and ended up doingthe 180.

 

[Reptar_On_Ice]

With how much they're charging us right out of the gate, I'd certainly hope that they're going to make a profit or at least break even. We'll see how well it sells, though. Sony expected to break even with the PS3 at launch, and we all saw how that worked out. Also, saying Microsoft is smart by forcing a camera at people is just silly. We have no idea how the Kinect will be integrated. Last time the Kinect was supposedly going to be a revolutionary piece of hardware, it fell completely flat. If they start getting titles developed for them that utilize the Kinect properly, then great, but I wouldn't really bank their entire success on it. It really depends on how much trouble devs are willing to go through for one platform.

 

[bifftape]

But, it's not going to bomb in sales. Nowhere near it. You have the people who will pre-order, you have people like me that are just broke, but will get it, you have people that just don't want to deal with Day One, but will day ten, Christmas gifts and Hannukah gifts and those are the actual gamers. All of the media junkies will jump on this and Live and then start getting dance games and exercise games and core games.

I mean, I agree with you, but also that's what people were saying about Diablo III. They can't be shortsighted and not have a back up plan. They can't just ignore the worst case scenario out of bravado, even if the chances are extremely remote. I don't believe it's going to bomb in any way at all, but they would be idiots if they don't have a plan for it.

 

[Sugarhill]

With how much they're charging us right out of the gate, I'd certainly hope that they're going to make a profit or at least break even. We'll see how well it sells, though. Sony expected to break even with the PS3 at launch, and we all saw how that worked out. Also, saying Microsoft is smart by forcing a camera at people is just silly. We have no idea how the Kinect will be integrated. Last time the Kinect was supposedly going to be a revolutionary piece of hardware, it fell completely flat. If they start getting titles developed for them that utilize the Kinect properly, then great, but I wouldn't really bank their entire success on it. It really depends on how much trouble devs are willing to go through for one platform.

You either haven't been paying attention to what has come out about the One or you simply won't ever believe that Kinect is a worthy piece of technology until you find yourself using it much more than you've planned. First, for many people Kinect better and more often than it did not. It wasn't so much the hardware, it was the implementation from the developers. As I said in another thread, Kinect can't be perfect during a dance game or exercise game and then suddenly horrible during Star Wars.

The developers decided that they wanted to shortcut the time needed to make a good Kinect game, but the hardware stayed the same.

I mean, I agree with you, but also that's what people were saying about Diablo III. They can't be shortsighted and not have a back up plan. They can't just ignore the worst case scenario out of bravado, even if the chances are extremely remote. I don't believe it's going to bomb in any way at all, but they would be idiots if they don't have a plan for it.

Diablo III, one game unto itself and a console that has many more features and ways to still get a consumer to buy it would be the equivalent to apples and rocks. There is no need to further the discussion with that comparison.

 

[bifftape]

Diablo III, one game unto itself and a console that has many more features and ways to still get a consumer to buy it would be the equivalent to apples and rocks. There is no need to further the discussion with that comparison.

You do see what I'm saying though, right? There is no 100% certainty of success until the day comes. I was merely using the game as an analogue because the hype and expectations are/were very similar.

 

[alycat32]

I guess we will have to see. I know that even though its pricey, there won't be a lack of people buying it. Expense doesn't stop most people.