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

[JonnyLH]

So does the 3GB of memory reserved for the OS on XBOX One not count as overhead? The XBOX One will have tons of overhead. You can now easily switch out of games and run apps simultaneously. There will be a process constantly recording game video. All those extra features need resources ie. overhead.

Ok then, I'm going to simple this down for you. You build a PC with the equivalent specs of the 360 and tell me if it can run BF3.

[giantpotato]

Ok then, I'm going to simple this down for you. You build a PC with the equivalent specs of the 360 and tell me if it can run BF3.

I'm not talking about the 360, I'm talking about the XBOX One. And for your information a Radeon 6470, which has the same compute power as the 360, can indeed run Battlefield 3 at low settings and sub-HD resolution like on the 360.

[JonnyLH]

I'm not talking about the 360, I'm talking about the XBOX One. And for your information a Radeon 6470, which has the same compute power as the 360, can indeed run Battlefield 3 at low settings and sub-HD resolution like on the 360.

Its the same principle between all consoles, its not the specific hardware but the ideology of a console and the idea of a fixed platform. Why do you think the consoles were the bar setters in 2005 & 2006? Sub HD? BF runs at 720p and with the equivalent hardware of the 360, you'd be really struggling to hit the same fidelity which is on the 360 game at 30fps. Obviously you won't consider any opinion other than your own, so there's no point me even talking to you about this. If off the shelf parts performed the same as a custom architecture, why would MS invest 3 billion into AMD and have IBM co-produce a hefty SoC which has high production costs and potential failure rates? Logic man.

[trooper11]

Oh my goodness, you pc guys needs to lay off it, seriously.

 

Make a thread for these endless comparisons and keep it there.

 

I do a lot of pc gaming but people trying to argue for or against pc gaming vs consoles is just tiring. Consoles are closed systems with custom hardware.  No matter how similar to pc hardware they get, the fact that they are custom and unchanging for the life of the device means certain advantages and disadvantages.  Same goes for the pc, which enjoys an open system using parts that are aimed at general pc performance, not tuned to a single focus.  This leads to its own advantages and disadvantages.

[giantpotato]

Its the same principle between all consoles, its not the specific hardware but the ideology of a console and the idea of a fixed platform. Why do you think the consoles were the bar setters in 2005 & 2006? Sub HD? BF runs at 720p and with the equivalent hardware of the 360, you'd be really struggling to hit the same fidelity which is on the 360 game at 30fps. Obviously you won't consider any opinion other than your own, so there's no point me even talking to you about this. If off the shelf parts performed the same as a custom architecture, why would MS invest 3 billion into AMD and have IBM co-produce a hefty SoC which has high production costs and potential failure rates? Logic man.

And we've come full circle. Consoles were the bar setters in 2005 because they had superior hardware compared to PCs at the time. They sold at a loss then. That's not the case this generation. The console's are not even out and we're already hearing some games won't do 1080p. Last generation all launch games did 720p, then over time some games started rendering in sub-HD to give better looking graphics at the expense of resolution. Battlefield 3 is one of those games, it is rendered at 1280x704. Some games like Halo go as low as 540p. I don't doubt custom architecture will perform better than off-the-shelf, but that can only go so far. 

 

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. 

[trooper11]

 

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.

[DrunknMunky Veteran]

At ?430 I'm not surprised...

[Sandor]

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.

[trooper11]

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. 

[spenser.d]

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.

[George P Global Moderator]

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?

[DrunknMunky Veteran]

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?

[trooper11]

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.

[George P Global Moderator]

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.

[spenser.d]

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.

[Showan]

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.com/gaming/2006/11/8239/

The PS4 may be sold at a loss, but no where near the losses of the PS3..http://www.gamespot.com/news/sony-not-expecting-ps3-like-losses-for-ps4-6412760

[George P Global Moderator]

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.

[TruckWEB]

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....

[George P Global Moderator]

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.

[Showan]

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...

[GameOverRob]

Just cancelled my Xbox One pre-order as its a diabolical waste of money and I really don't like how Kinect is forced upon you. I'll be sticking with just the PS4 at launch and might pick up the Xbox One a year or so down the line when it is hopefully cheaper and there are some games worth playing on it.

[SnoopZ]

Just cancelled my Xbox One pre-order as its a diabolical waste of money and I really don't like how Kinect is forced upon you. I'll be sticking with just the PS4 at launch and might pick up the Xbox One a year or so down the line when it is hopefully cheaper and there are some games worth playing on it.

The Kinect isn't forced upon you as you don't have to plug it in, unless you meant you're forced to buy it?

[spaceelf]

I cancelled mine too but for vastly different reasons.  I'll reorder when I can, but for now I'd rather focus on getting our TV and AV setup improved.

 

Seems kinda awkward to hook Kinect up in my bedroom (only place with anything 1080p until Friday) when it's practically the only gamey thing most of my family has shown the slightest interest in.

[GameOverRob]

Yes I mean you're forced to purchase it, therefore it is entirely forced on you. Why would you want to pay for something you have no intention of using.

[trooper11]

Just cancelled my Xbox One pre-order as its a diabolical waste of money and I really don't like how Kinect is forced upon you. I'll be sticking with just the PS4 at launch and might pick up the Xbox One a year or so down the line when it is hopefully cheaper and there are some games worth playing on it.

 

 

Its only a waste of money if you have no interest in the launch title lineup and the announced games.

 

That's how I see it for trying to choose between the two.  Get the one with the game you want.  If that's the ps4, go for it. 

 

The Kinect thing is always going to be an issue.  I don't think it should be something to kill the deal if you like the games coming, but if you aren't interested in them and aren't interested in Kinect, including Kinect would definitely make it easier to NOT get an X1.

 

As you said though, games you want may come out over the course of the first year.