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Xbox One will be break-even or profit-making from launch

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#31 trooper11

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Posted 12 September 2013 - 22:09

 

I don't care if PC is better than XBOX or vice-versa, my point is that Microsoft could have custom designed hardware that guarantees 1080p60 and sold it at a loss this generation, but they didn't. 

 

 

Unfortunately selling at a loss may not be possible anymore.  Neither Nintendo nor Sony can afford to do it anymore and while MS has money sitting around, it may be tired of bleeding it away as it has done in the past.

 

Console gamers have been pretty lucky up to this point.  There were companies willing to drop big $$ on hardware and make it up on software sales.  Now, we are starting to see a bit of correction and console makers realizing that selling at a loss is not a long term success.




#32 Andrew

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Posted 14 September 2013 - 01:46

At £430 I'm not surprised...



#33 Sandor

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Posted 14 September 2013 - 01:53

You mean apart from getting an amazing console that's well worth the price tag?  It's ridiculous to hold these companies to a standard of losing money on their products.  The only reason they've been doing so is because they'd have lost more money by trying to charge any more.  $500 for something that'll last me a decade isn't exactly a crap deal and if they're actually making money off of it, it'll benefit everyone in the long run.

Decade? lol.

 

They make money off Live and the games at $60 a copy.



#34 trooper11

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Posted 14 September 2013 - 03:13

Decade? lol.

 

They make money off Live and the games at $60 a copy.

 

 

And yet the xbox division has barely started making profits and still has not covered initial costs.

 

Making consoles is an expensive business. 



#35 spenser.d

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Posted 14 September 2013 - 13:19

Decade? lol.

They make money off Live and the games at $60 a copy.


My Xbox 360 will end up lasting a decade, no reason to think the Xbox One wont.

#36 George P

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Posted 14 September 2013 - 16:52

I think people have to get a better idea about the game split when talking about that $60 price for new games.   You have to remember that, depending on if it's first party or 3rd, the money is split a number of different ways.

 

You start off at $60 but then retail get's it's cut, the publisher gets their cut if it's 3rd party then it's not MS,  the developer gets their cut after that and finally the platform holder gets their licensing cut which could be who knows what when it's all done.     This is why consoles, for years now, have only ever started to turn a profit years into their lifespans off of the software/games they sell since each unit was/used to be, sold at a loss.

 

That changed with the Nintendo Wii, it was never sold at a loss so it started to make back it's money for Nintendo from day 1 and not 3 or 4 years later.   This is exactly why they're extending the lifespan of these systems as much as they can, R&D costs have gone up,  all the backend stuff is now a deep part of them that wasn't the case 10 years ago, more added costs.    Costs of making big AAA games has gone up with time as well, i'm blown away by how long the credits run for some of todays games they end up dwarfing Hollywood movie credits very often.

 

So what's the big deal of MS sells the hardware at cost or for a small profit from day 1 instead of 3 years from now?   Is this even a issue here or just something to nitpick over?    In the end it's better this way because I think they can then lower the price quicker, maybe even a year later instead of years later.  When did the 360 see it's first price cut, anyone remember?



#37 Andrew

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Posted 14 September 2013 - 22:56

I think people have to get a better idea about the game split when talking about that $60 price for new games.   You have to remember that, depending on if it's first party or 3rd, the money is split a number of different ways.

 

You start off at $60 but then retail get's it's cut, the publisher gets their cut if it's 3rd party then it's not MS,  the developer gets their cut after that and finally the platform holder gets their licensing cut which could be who knows what when it's all done.     This is why consoles, for years now, have only ever started to turn a profit years into their lifespans off of the software/games they sell since each unit was/used to be, sold at a loss.

 

That changed with the Nintendo Wii, it was never sold at a loss so it started to make back it's money for Nintendo from day 1 and not 3 or 4 years later.   This is exactly why they're extending the lifespan of these systems as much as they can, R&D costs have gone up,  all the backend stuff is now a deep part of them that wasn't the case 10 years ago, more added costs.    Costs of making big AAA games has gone up with time as well, i'm blown away by how long the credits run for some of todays games they end up dwarfing Hollywood movie credits very often.

 

So what's the big deal of MS sells the hardware at cost or for a small profit from day 1 instead of 3 years from now?   Is this even a issue here or just something to nitpick over?    In the end it's better this way because I think they can then lower the price quicker, maybe even a year later instead of years later.  When did the 360 see it's first price cut, anyone remember?

 

Really? You need to ask?

 

If you do, I'm sure Sony will be happy to explain how it worked out for them over the period of 2005/2009.

 

Your post was actually accurate and sounded intelligent until that last paragraph. Hell, why not bump it up another $100 and forget about attach rate for a year or 2 while they're at it?



#38 trooper11

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Posted 14 September 2013 - 23:56

Really? You need to ask?

 

If you do, I'm sure Sony will be happy to explain how it worked out for them over the period of 2005/2009.

 

Your post was actually accurate and sounded intelligent until that last paragraph. Hell, why not bump it up another $100 and forget about attach rate for a year or 2 while they're at it?

 

 

Um, if I remember correctly, even at the crazy price of $599, Sony was not selling the PS3 for a profit.  They lost money on that thing for quite a while. 

 

We haven't heard anything about if Sony is selling at a loss or not, but it wouldn't shock me to find out they too are aiming for break even or small profit from day one.

 

I mean the signs are all there to see.  Both Sony and MS have built consoles that are the equivalent of mid range pcs.  People have been complaining that this generation just doesn't provide the bleeding edge leap of previous generations compered to pcs. Sony isn't in great financial shape and MS is tired of bleeding millions/billions so they both go with more conservative designs (i.e. off the shelf x86, ddr3, gddr5, etc) to save money up front and also guarantee quicker cost reductions over time.

 

The console market is not what it use to be and these companies aren't able or interested in taking big losses up front.



#39 George P

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Posted 15 September 2013 - 07:16

Really? You need to ask?

 

If you do, I'm sure Sony will be happy to explain how it worked out for them over the period of 2005/2009.

 

Your post was actually accurate and sounded intelligent until that last paragraph. Hell, why not bump it up another $100 and forget about attach rate for a year or 2 while they're at it?

 

Sony's $600 PS3 was pushing it though did it really change things?  They're pretty close in the overall console generation even with their slow start.  Besides, as much as people hate it, the $500 XB1 does come with a Kinect even if people don't want it, it's reflected in the price.   You just got a overhyped PS3 for $600 back then which made way less sense.

 

The point is, they're going to go the way Nintendo did with the Wii, if they can make money back from day 1 and not keep adding to their losses from selling each unit at a loss to begin with then they can cut the $500 price down quicker.  No one has answered my question, how long was it before we saw the first price cut on the 360?   Consoles never see price cuts quick, but that could change this generation with the XB1, which in the end would be a good thing.

 

I also believe that even at $600 Sony was losing money on each PS3 at the time still, so much so they had to sell off all their Cell chip fabs to Toshiba after dropping billions in R&D on it.



#40 spenser.d

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Posted 15 September 2013 - 14:49

Really? You need to ask?

If you do, I'm sure Sony will be happy to explain how it worked out for them over the period of 2005/2009.

Your post was actually accurate and sounded intelligent until that last paragraph. Hell, why not bump it up another $100 and forget about attach rate for a year or 2 while they're at it?


$500 isn't that expensive for something that will last and be relevant for a decade. The ridiculous thing is to expect companies to sell their products for a loss. It only happened in the past because it was cost prohibitive to do so, but at $500, its clearly not an issue given preorder numbers.

#41 Showan

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Posted 15 September 2013 - 22:23

Sony's $600 PS3 was pushing it though did it really change things?  They're pretty close in the overall console generation even with their slow start.  Besides, as much as people hate it, the $500 XB1 does come with a Kinect even if people don't want it, it's reflected in the price.   You just got a overhyped PS3 for $600 back then which made way less sense.
 
The point is, they're going to go the way Nintendo did with the Wii, if they can make money back from day 1 and not keep adding to their losses from selling each unit at a loss to begin with then they can cut the $500 price down quicker.  No one has answered my question, how long was it before we saw the first price cut on the 360?   Consoles never see price cuts quick, but that could change this generation with the XB1, which in the end would be a good thing.
 
I also believe that even at $600 Sony was losing money on each PS3 at the time still, so much so they had to sell off all their Cell chip fabs to Toshiba after dropping billions in R&D on it.



X360's first price cut came in August 2007 (almost 2yrs Removved from its debut in 2005)

Selling the Xbox One at break even price (or small profit) of $500 is a risk,reward situation. The risk is, trying to convince people to shell out $500 while the WOLRDS economy is still iffy. The reward being, if they can convince more consumers outside of us core gamers, to adopt early, the Xbox One will be a $$CASH COW$$ right out of the gate.

Xbox One early sales, will depend on how the GameStop, Walmart, Best Buy, etc... Staff pitch the X1 to consumers.

Their commercials will also be key. I liked the NFL Commercial, but they are gonna have to have more commercials that don't move at a frantic pace, and just show how efficient and simple the console is to use.

The PS3 was selling at a huge loss during its debut. http://arstechnica.c...g/2006/11/8239/
The PS4 may be sold at a loss, but no where near the losses of the PS3..http://www.gamespot....for-ps4-6412760

#42 George P

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Posted 16 September 2013 - 11:16

I expect a quicker price cut with the XB1 compared to the 360, if it took around 2 years to get the first cut for the 360 then I bet we see the XB1 price drop in a year.   I also expect MS to cut some deal with cable providers, if they're up for it, which could see it sold with a cable subscription, probably 2 year, for $399 or maybe even lower.



#43 +TruckWEB

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Posted 16 September 2013 - 11:41

One question could be : How quick will 4K TV become mainstream?  Think how Wii games (480p) looks at 1080p compared to X360 or PS3 games...

 

Console have a shelf life of 7-8 years.  Will it be fun to play 720p games upscaled to 4K?

 

The XBox One and PS4 should have included GPU that could easily push 1080p @ 60fps.  At least it's more pixels to upscale to 4K....



#44 George P

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Posted 17 September 2013 - 07:49

4k isn't going to catch on anytime soon, look at 3D, it didn't.  People who have a nice 1080p big screen TV aren't going to rush out to buy a new, expensive 4k TV anytime soon.  And even when the price drops the 1080p models are still going to be cheaper to get and will be around for quite some time.   I personally don't see 4K taking over as the mainstream HD in homes anytime soon, specially not in the next 5 years.



#45 Showan

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Posted 17 September 2013 - 11:43

4k isn't going to catch on anytime soon, look at 3D, it didn't.  People who have a nice 1080p big screen TV aren't going to rush out to buy a new, expensive 4k TV anytime soon.  And even when the price drops the 1080p models are still going to be cheaper to get and will be around for quite some time.   I personally don't see 4K taking over as the mainstream HD in homes anytime soon, specially not in the next 5 years.


Tube to DLP/LCD TV's was both an evolution and revolution of television..The tv got better visually and also came with a smaller footprint.. A breath of fresh air on both accounts.

LED,OLED,CURVED GLASS,4K... All these technologies are too close together, and thus forth the average consumer isn't gonna upgrade anytime soon...