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So how much does Microsoft lose per 360 sold?

Ross Miller

We all love to speculate how financially successful our favorite game companies are--it's a guilty pleasure that we often indulge thanks to monthly software charts and reports like these from Portelligent, Inc. In light of Microsoft's recent announcement to triple the Xbox 360 shipments, Joytiq's top contributor, epobirs, has unearthed this "Quick Turn Teardown" on an Core System at launch.

Portelligent estimates that a Core System cost Microsoft $310 to produce. However, the press releases errs in Samsung's SDRAM size (they note 64MB; the console has 512MB of RAM), and we not sure if that is a typo in the press release or an analysis-altering slip-up--we are awaiting confirmation from Portelligent and will update as soon as we know. If accurate, though, that means Microsoft is losing very little per unit sold, and just one game purchased (even Geometry Wars) makes the console profitable. As time passes, the parts used to make the console will become less expensive, and Microsoft will have no problem making frequent price drops while still turning a profit.

Epobirs writes, This means when Microsoft gets a major revision of the chipset at the 65 nm process node it could possibly break even on console after a reduction of the retail price. Not only would the cost of the silicon go down considerably but also the reduction in power draw and cooling needs would allow for cost reductions in those components as well. (Whether they'd choose to produce a smaller version of the 360 is another issue. They might save that for 45 or 32 nm.)

Even if the Xbox 360 fails to overtake Sony's PlayStation 3 in market share, the console could end up being a financial success for Microsoft, much in the way Nintendo can claim a profit for every GameCube sold (despite being 3rd place in worldwide console sales). Any thoughts?

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