Hardware Analyst Breaks Down Cost Of Xbox 360

[+Audioboxer Subscriber²]

Right now, I can buy a 120GB hard drive to drop in a PlayStation 3 for $69.99 from NewEgg.com [update: I’d previously listed this as $44.99 with an incompatible drive]. To do the same thing with an Xbox 360, it’d cost me $179.99.

But why does it cost so much?

Microsoft has claimed that comparing their plug-and-play hard drive is akin to comparing apples to oranges, that Microsoft goes the extra mile to ensure the customer can simply slap their hard drive on a machine and it’ll work.

MTV Multiplayer contacted iSuppli, a company with a long history of examining consumer gizmos to discover their real cost. We had them look at Microsoft’s 120GB hard drive and estimate whether — or how much — the company’s marking it up.

iSupli representative Krishna Chander expects the hard drive came from electronics manufacturers Toshiba or Seagate . When the hard drive ships to retail, it comes pre-loaded with starter software (i.e. Xbox Live Arcade trials) and “specific Gaming Instructions and some levels of the OS,” said Chander.

Unlike an off-the-shelf drive that can simply be loaded into your standard PS3, Chander explained, the Xbox 360 drive’s pricing also includes color tuning and packaging. This begins to drive the price up from what you might see at an online retailer like NewEgg.

The software-loaded drives are then sold to what’s called Value Added Resellers (VARs). These folks take the base drives and apply the casing and packaging. iSuppli expects VARs purchase the drives for $75, before charging $5 to add their part to the final package that ends up appearing at your local games store.

These drives are then delivered to Microsoft. iSuppli believes the markup on the drives could be as much as $20, making the drives $100 a pop for Microsoft.

Microsoft then sets a suggested price for retail. In this case, it’s $179.99, though retailers are free to move that price up and down (but usually don’t). Amazon.com, for example, is currently offering the hard drive for $149.99 but GameStop (at least their online site) remains at $179.99.

iSuppli’s estimates, however, are just that: estimates. Could Microsoft be making this much profit? One thing is clear: unlike Sony, the company doesn’t have to worry about open competition among hard drive options for their console, the kind of competition that usually drives prices down.

Source: http://multiplayerblog.mtv.com/2008/05/06/...rive/#more-3867

Around $100 of profit per unit? That is pretty steep :/

Thinking about putting any content on your 360, buy an Elite!

MS better drop these prices if they plan on really going down the route of digital distribution, and permanently owning movies once you've bought them.

Even if you buy a few Xbox classics, that will eat up most of your 20GB space.

20GB is enough for me for now, as I don't buy much off XBLA, and I don't store any content (movies/tv shows) on my 360 - I mostly stream everything.

[sundayx Veteran]

You have to buy drives from Microsoft exclusively? Ouch.

[+Audioboxer Subscriber²]

You have to buy drives from Microsoft exclusively? Ouch.

There are ways to mod specific drives to trick the 360 into believing they are from MS, however I don't know the legal stance on that - Then you have to track down a specific model.

I've always though if I want more space, that's the way I'm going anyway.

I'd post a link to a guide, but I dunno if I can.

[WastedJoker]

A remarkable difference from the ease of popping in a 250GB drive into a PS3.

[Sethos]

Think we had the same subject up for discussion last year with the 20 GB models.

I would be upset about the price, if it actually had an impact on me. I had Premium with the 20GB HDD and now an Elite with the 120GB. I never used more than 5-6 Gigabytes on my Premium and currently I'm downloading demo after demo and i haven't even used 20 GB on my Elite - What are we gonna use it for?!

You pop in a game and play, 360 Users don't need to install, i personally have nothing besides demos to fill up the HDD with and some Savegames ( Which is hardly worth mentioning )

When they start releasing contents that will take up my HDD space, this might be an issue.

[+Audioboxer Subscriber²]

Think we had the same subject up for discussion last year with the 20 GB models.

I would be upset about the price, if it actually had an impact on me. I had Premium with the 20GB HDD and now an Elite with the 120GB. I never used more than 5-6 Gigabytes on my Premium and currently I'm downloading demo after demo and i haven't even used 20 GB on my Elite - What are we gonna use it for?!

You pop in a game and play, 360 Users don't need to install, i personally have nothing besides demos to fill up the HDD with and some Savegames ( Which is hardly worth mentioning )

When they start releasing contents that will take up my HDD space, this might be an issue.

Yeah right now I don't have any issues with 20GB - Unlike the PS3 there are no mandatory installs.

Probably to do with the drive being quicker, however mandatory installs would be suicide by developers on the 360 due to the segregation for anyone with a core/arcade.

This will only really become a larger issue as MS continue to promote DD, and if DD picks up at a faster pace than us critics think.

IMO it still doesn't excuse the premium they are charging just now, but right now they pretty much get away with it as most people aren't burning through the MB's.

And those interested in shows/movies can easily enough stream content for now.

[dnast]

I don't see how you guys are coming up with a profit of nearly $100. If it really costs MS $100 and retailers are making a profit selling them at $179, then I can't see MS making more than $60 each, if that. Retailers usually make a decent profit selling video game peripherals.

That being said, $179 is a very steep price for the consumer. I guess that's to be expected seeing as most of the other peripherals for the 360 are like that...

[Sethos]

I'm actually glad they released a console with no HDD.

This means mandatory installs is a big no-no and in my world, installing games is preserved for the PC only.

A console in my world is something where you pop in the game and just play. So this is another point where

they will save HDD space.

Since It's 4 in the morning where i am, i gotta ask what "DD" is :laugh: ?

But for the topic overall, the prices are ridiculous, agreed. Seems either like Microsoft are being greedy or trying to recoup some money, since the whole warranty business must've hurt the Console division of Microsoft.

One thing though - I listened to a podcast last year concerning the HDD's and the guy mentioned you can't just look at 2.5" Drives, you need to look at the prices for External Self-powered HDDs to compare cost.

[+Audioboxer Subscriber²]

I'm actually glad they released a console with no HDD.

This means mandatory installs is a big no-no and in my world, installing games is preserved for the PC only.

A console in my world is something where you pop in the game and just play. So this is another point where

they will save HDD space.

Since It's 4 in the morning where i am, i gotta ask what "DD" is :laugh: ?

But for the topic overall, the prices are ridiculous, agreed. Seems either like Microsoft are being greedy or trying to recoup some money, since the whole warranty business must've hurt the Console division of Microsoft.

DD is just me shortening digital distribution :)

Lazy bugger I am :laugh:

One thing though - I listened to a podcast last year concerning the HDD's and the guy mentioned you can't just look at 2.5" Drives, you need to look at the prices for External Self-powered HDDs to compare cost.

MS ship their 360 with a casing though, I think it would just of made sense to let us replace the drive in the casing instead of buying the whole sha-bang all over again which obviously bumps costs.

[Sethos]

Yes,

I do agree they should let users change the HDD themselves, but beside Microsoft wanting to squeeze as much money out of the consumers as possible, i also think they did it because they really wanna focus on the 'closed' platform. When you have specialized components with a certain signature, they can keep an eye on you like they do with Firmware and Chipping.

We know for a fact they keep a very close eye on modded consoles, so letting users change the HDD you open up for lots of opportunities to bypass security and messing around with the console, specially when the OS is also supposed to be installed on there.

This is of course speculation from my part, perhaps i might just sound like a disillusioned alcoholic - Perhaps i should get some sleep.

But there's no excuse for the pricing except greediness.

[ScottKin]

ummm...excuse me?

"color tuning"?

How does someone "color tune" a hard drive?

"Excuse me - my hard drive isn't showing BLUE properly"

:woot:

--ScottKin

[AlphaPrime]

I still have around 10GB left on my 20GB HDD in the 360 Pro, but then again I don't buy anything from the Marketplace.

The thing is, you're going to need a bigger HDD if you're the sort of person who likes to download TV shows, movies, Xbox 1 games, etc. If the cost of entry is too much though, a lot of people are just not going to bother. The price of 2.5" SATA HDDs has dropped a lot in the past 6 months. Right now I can buy a 320GB laptop drive with an external enclosure for nearly AU$40 less than Microsoft's 120GB laptop drive.

Maybe if they drop the 120GB to US$99-$119 or so, it would encourage more people to buy stuff off the video Marketplace.

[Glorious]

Nice, glad I saved a lot of money on mine then. Just got one for ?50.

[spenser.d]

Even if you buy a few Xbox classics, that will eat up most of your 20GB space.

That's the only thing I'd like a 20GB drive for. I'd probably buy Fable (and others) through Xbox Originals if I had a bigger HDD.

Not that big a deal though - I save $15 this way :p

For all other purposes of my own though, 20GB is enough. Like you, I pretty much stream all my content so that's not what takes up any space on my HDD.

-Spenser

[+Audioboxer Subscriber²]

That's the only thing I'd like a 20GB drive for. I'd probably buy Fable (and others) through Xbox Originals if I had a bigger HDD.

Not that big a deal though - I save $15 this way :p

For all other purposes of my own though, 20GB is enough. Like you, I pretty much stream all my content so that's not what takes up any space on my HDD.

-Spenser

If MS don't alter these hard drive prices but continue to push DD, one thing they should try and do is let PC owners rent movies and then stream them to their 360.

Doubt they'll let that happen though, MS are extremely tight with the 360 - Plus with what applications can do on the PC there is always a worry of DRM being broken.

So really it's not all that great an idea for renting :/ Maybe for buying and owning a movie...

[Smigit]

Probably to do with the drive being quicker, however mandatory installs would be suicide by developers on the 360 due to the segregation for anyone with a core/arcade.

I do however wish companies would do optional installs. I would normally agree with Drunken Monkey on the fact that installs shouldnt be necessary for a console, however with the damn noise these DVD drives make the more data on the HD the better. I'm sure mines probably an exception case and the fact my rooms quite small at maybe 3-4m x 3-4m prevents me putting distance between the console but still, I'd like the option to install.

As for the actual cost of a HD. The price MS offers is a bloody joke IMHO. Fortunatly I bought my 120GB one when they first came out here and barely any stores had em and I thus was able to sell my 20GB one on Ebay for half the price of the 120GB so I payed $100AU (probably 80 - 90US). I don't even know how much I use, but I did it for peace of mind and ability to use the digital downloading store if I wish when it opens up down here in Aus.

I know I've beaten this horse to death a bit...but for a company that really wants to push digital movie downloads in certain regions they aren't doing themselves a huge favor by a) making the 20GB standard (of which 14 or so Gigs is free for use) and b) charging so much for the 120GB drive. Given the price of the 120GB unit, if a user has a 20GB or even an arcade now I can see them looking for other means to get digital movies given the cost to invest in the 360 drive is pretty high. I'd understand if gaming was their vision in it's entirety but MS has clearly stated they want the 360 to be the media hub of the lounge room and that vision included movie subscriptions ect.

If I was MS I'd at least try running a promotion where for a month they slash the price so they are making maybe a 10% profit on the units and ship the drive with a coupon for 2 or 3 HD movie rentals over live. If it doesnt take off by the end of the promotion nothing is lost but it could get customers hooked on the idea and open that (rentals) up as a revenue source a bit more.

Edited May 11, 2008 by Smigit

[Boz]

A remarkable difference from the ease of popping in a 250GB drive into a PS3.

Yep, cause it would be a disaster if Sony closed up the drives, since you'll need 100s of gigabytes of storage space (you'll have to BUY) for PS3 since you'll install pretty much every game at about 5 gb or more, unlike Xbox 360 games where you don't NEED a hard drive to play them.

Hard drive is just for Xbox Live Marketplace downloads. That's it. You rent a movie, watch it and delete it. No biggie. 120gb is just fine. I simply didn't have the need to get anything bigger for while and I spend LOADS of money on HD shows, game downloads, HD movie rentals etc etc.

[+Audioboxer Subscriber²]

Yep, cause it would be a disaster if Sony closed up the drives, since you'll need 100s of gigabytes of storage space (you'll have to BUY) for PS3 since you'll install pretty much every game at about 5 gb or more, unlike Xbox 360 games where you don't NEED a hard drive to play them.

Hard drive is just for Xbox Live Marketplace downloads. That's it. You rent a movie, watch it and delete it. No biggie. 120gb is just fine. I simply didn't have the need to get anything bigger for while and I spend LOADS of money on HD shows, game downloads, HD movie rentals etc etc.

It's inevitable they'll allow you to own movies one day though.

If they don't, renting vs owning a physical format is never going to catapult DD past BR.

[+Nik Louch Subscriber²]

I find the HD cost to be a pure joke.

As for calling Audioboxer a troll: Get a life - Audioboxer is a respected member of the faming forums here.

[King Antonius]

Theyre making a killing out of us brits the. The 120Gig HDD is the equivalent of $240....

[PiracyX]

The cost of the 120GB HDD is a bloody joke. Here in the UK u can pick it for a whopping ?129.99. Who do they think they are charging this sort of money? The only people that do win is first time buyers getting a XBOX360 where they can get the Elite model with it included but what about people before that came out? The cost of the 20GB HDD should be ?29.99 or less and the 120GB should be ?59.99 or less. MS looks like an idiot charging this.

[Mike]

Yep, cause it would be a disaster if Sony closed up the drives, since you'll need 100s of gigabytes of storage space (you'll have to BUY) for PS3 since you'll install pretty much every game at about 5 gb or more, unlike Xbox 360 games where you don't NEED a hard drive to play them.

Hard drive is just for Xbox Live Marketplace downloads. That's it. You rent a movie, watch it and delete it. No biggie. 120gb is just fine. I simply didn't have the need to get anything bigger for while and I spend LOADS of money on HD shows, game downloads, HD movie rentals etc etc.

you do know you can delete the installed data? :p the 5 games i've got installed take up 10gb (gt5:p being 6gb, gta4 being 3gb and 3 others taking <100mb each), so i've got another 15 games to get before i need to even think about uninstalling one and buy the time i reach 20 games i'll unlikely be playing most of the earlier titles. then again, i thought there wasn't any games for the PS3 so 40gb is overkill :p

[+jamesyfx Subscriber²]

Before I sold my 360 I kinda peeled away the hard drive outer casing and it just looked like a standard 2.5in drive, or maybe one of those 1.8in ones. I still never understood why you couldn't just put in any other drive.

Software right?

[+Audioboxer Subscriber²]

Before I sold my 360 I kinda peeled away the hard drive outer casing and it just looked like a standard 2.5in drive, or maybe one of those 1.8in ones. I still never understood why you couldn't just put in any other drive.

Software right?

There is some sort of key that has to be somehow preloaded on the drive for it to work.

That's why as I said earlier if you can find an OEM drive, same brand and model that MS use, there are workaround methods to injecting that "key" onto the drive yourself, and then putting the drive into the enclosure.

It's a 2.5" laptop drive by the way.

[+Nik Louch Subscriber²]

but you're just looking for an argument.

No - not at all - I was actually being ironic - trying to lighten the tone!