Costs
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SpaceX price hikes will make ISS cargo missions more costly
NASA said it will pay $400 million more for cargo delivery to the International Space Station (ISS) starting in 2020, thanks in part to a 50 percent price increase from supplier SpaceX. On top of that, the ISS will receive six fewer tons of cargo, so on a cost-per-pound basis, prices will rise by 14 percent for the second phase of commercial resupply (CRS-2) missions between 2020 and 2024. The information comes from a new NASA audit, and reveals new details about the 2016 bidding for CRS-2 missions.
Monitoring Julian Assange has cost the UK government up to £10 million
It's easy to forget that Julian Assange is still cooped up inside London's Ecuadorian embassy. The WikiLeaks founder entered the building back in June 2012 to escape extradition and ever since, Metropolitan Police officers have been stationed outside, waiting patiently just in case he ever decides to leave. It might not sound like the most costly operation, but over the years it's racked up quite a bill for the UK government. Earlier this month the Met revealed that policing the embassy had cost an estimated £9 million up until October last year. That equates to roughly £10,500 per day --- and if you project that forward, it means the entire affair has now crossed the £10 million mark. Of course, this is all merely an approximation, but it further highlights the costs involved in the Assange affair. Last summer, the man himself revealed that he would be leaving the embassy "soon," but since then there's been no sign of his imminent departure. Unless his health or legal circumstances change, the bill for the UK government is only going to increase.
Report: Sony seeking $100 million in cuts, includes job losses
Sony has hired management consulting firm Bain & Company to identify $100 million in cuts, Bloomberg reported. The cuts would reportedly include job losses, though how the cuts to the company's costs would divide out among its entertainment divisions is unknown. The report follows a second quarter loss reported by Sony of ¥19.3 billion ($197 million). As of its late October financial report, the company said it expects to ship 15 million PS3 and PS4 systems combined, with SCEA boss Jack Tretton recently projecting three million PS4 consoles sold by year's end. Sony did manage to sell one million PS4 units in the system's first 24 hours on shelves; Whether that factors in to the reported job losses remains to be seen.
An iPad mini with Retina display could cost $12 more to build
Hardware market research firm iSuppli has released a new report that claims the cost-per-device of an iPad mini sporting a Retina display screen could be fairly high: as much as $12 or more. Even if all of the other parts stay the same price, just adding a Retina display in the iPad mini's size, iSuppli's report suggests, would bring Apple's cost above $200, which would likely mean higher costs for consumers as well. Which doesn't seem all that impossible -- the current iPad mini is selling quite well at $329, and you have to think that potential purchasers would be happy to spend a bit more for a full Retina display. Plus, if Apple really needed to shave some of that margin off just to boost sales, it probably could (though that would be a very un-Apple move, and it seems like it'll be a while before the iPad mini needs any extra help). For any other company, $12 per device might be a real problem, but Apple has still has quite a few options to deal with such a high increase in cost. Not to mention that Apple is always working on its supply costs, so while that may be the price now, the company may be working hard on figuring out a new way to supply and develop smaller Retina displays, or to work out a deal to make them cheaper in general. It's true, putting the Retina display in the iPad mini won't be cheap at the moment, but if anyone can figure out a way to do so without attacking their very high margin, it'll be Apple. [via App Advice]
What do venture capitalists see when they look at games?
Kickstarter has gained a great deal of traction lately, but by and large new games are still funded the same way they've always been funded: by venture capitalists willing to shell out money in hopes of seeing a return on investment. That being said, the games industry looks at venture capitalists more as fountains of money than actual people, a necessary evil at best. A new piece penned by Jeremy Liew of Lightspeed Venture Partners sheds some light on what goes on behind the scenes when capitalists are approached for funding. Liew makes a point of mentioning that one of the features he looks for is the idea that the studio can turn out another good game after the first one, mentioning CCP Games and Jagex as both lagging behind. He also points out the power of community, noting that League of Legends gained much of its current popularity by completely taking over the DOTA community. While the piece is focused on gaming as a whole rather than just MMOs, fans of video games will no doubt find several points of interest within the full article.
Is Google selling the Nexus 7 at a loss?
Andy Rubin has already made it known that Google isn't planning to profit from the Nexus 7's hardware -- according to him, it's being sold at cost. However, a teardown conducted by TechInsights (and reported by Fudzilla) suggests that the true extent of our 'discount' may have been underplayed, because the Nexus 7's parts alone reportedly add up to around $184. That's just $15 below the current asking price for an 8GB model, before you even get to all the added costs like packaging, distribution, support, marketing and the tidy $25 Google Play voucher that comes as part of the bundle. Now, these figures may not be reliable, because who knows what deals Google and ASUS managed to negotiate, but still, it's further evidence (in case you needed it) that this tablet makes for a smart purchase.
The Soapbox: Credible currency
Disclaimer: The Soapbox column is entirely the opinion of this week's writer and does not necessarily reflect the views of Massively as a whole. If you're afraid of opinions other than your own, you might want to skip this column. With all of the other crises hitting the gaming world, it's easy to have missed the fact that Lord of the Rings Online has started selling statted gear in the cash shop. It's not endgame gear, of course, and it's mostly there for low-level players to get a minor boost. Really, as has been said by others, it's not something all that unusual, nor is it game-breaking in the slightest. It's just a convenience thing. It's also something that Turbine promised would never be done. I don't have an issue with the sale of low-level armor with stats on it, in Lord of the Rings Online or in other games. What I do have an issue with is the matter of credibility, the one currency that every company starts with and loses over time. Credibility is something you have to spend carefully, and every so often, a company spends it wrong. And the results, in the long term, are never pretty.
North Carolina town goes paperless, embraces iPads
The town of Cornelius, NC has launched a new program designed to cut down on paper use in the town's government facilities, and the linchpin of this program is none other than Apple's tablet, the iPad. According to the local Herald Weekly paper, the town passed out iPad 2s to commissioners at a recent board meeting, and plans to use the devices for sharing agenda packets, budget information, and everything else you need to run a small town, without printing any of it out. The whole plan seems surprisingly well thought out -- the town actually ran a trial of the program with just three iPads, and the paperless agenda plan has been set up for quite a while now. It was relatively cheap, too -- the town has only spent $5200 on the iPads (not counting some document sharing software previously purchased), and fully expects to make that money right back up in saved time and paper costs. Pretty impressive move, and of course this means the town commissioners also get to use Apple's magical and revolutionary device during meetings (though they should probably keep the Angry Birds off of government property, just in case). We've seen iPads used in a professional setting before to great effect, and here's another situation where Apple's product is not only better for a few reasons, but actually cheaper as well. [via Gigaom -- but the town is not in Colorado, it's in North Carolina]
Ask Massively: A public service announcement regarding acronyms edition
Ladies and gentlemen, I come to you with an earnest and heartfelt plea: Know what acronyms stand for if you insist upon using them. ATM is an acronym that includes the word "machine," ditto for PIN and the word "number." If you ask someone to enter his PIN number, you sound like an idiot. The whole reason that people started using these acronyms was to save time, and now you're ruining it. Get a clue. Love, everyone in the world who knows what these acronyms actually mean. (P.S., we don't really love you.) Now that we've gotten the public service announcement out of the way, it's time for this week's Ask Massively, which we'll try to keep as free of acronyms as humanly possible. This week's questions are all about the Benjamins -- why we're getting charged full price for boxed games and how subscription-optional prices shake down over the long term, specifically. As always, you can send questions for next week in to ask@massively.com or leave them in the comments below.
Report: 3DS components cost about $100
UBM TechInsights has done a teardown of the Nintendo 3DS and marks the total cost of the system's hardware at $101. That's $15 more than the DSi was reportedly made for, though the 3DS also includes a 3D screen and a gyroscope, along with other enhancements. Retailers are selling the 3DS for $250, but that's not all markup -- there are marketing, research and other charges associated with a console release, and everyone in the supply chain has to take their own cuts, of course. Still, Nintendo is likely making a profit on every unit sold, which is exactly as expected (and what it did with the Wii). Even before you start talking about games and licensing, Nintendo is making sure there's some money rolling back its way from day one.
European newspaper publishers unhappy with Apple's publication requirements
A few European publishers have heard from Apple about subscription arrangements on the App Store, and they're not happy at all. The agreement isn't that surprising -- just as with the current setup in iTunes for software developers, Apple is asking that all subscriptions go through them, and that they take their usual 30 percent cut. But that has European publishers quite angry -- not only is the price higher than they want to pay, but they say it's because Apple will cut them out of access to things like subscriber demographics and other inside information that they'd have if they ran subscriptions themselves. All fair points. Apple definitely doesn't want to "lose control" of any possible in-app subscriptions, and since it already controls access to the App Store, these publishers are at Apple's whims anyway. If publishers try to run a subscription scheme Apple doesn't agree with, their apps likely won't stay on the App Store for long. Of course, the real meter here is The Daily -- while it got a nice reaction at launch, if that model doesn't prove itself to be profitable or workable, publications may not bother with the App Store anyway. Even if they don't run apps through Apple's subscription channels, there's still Mobile Safari and conventional paywalls. [via App Advice]
Marvelous caps 3DS game development at $1.8M per title
During a recent investor call, Marvelous Entertainment, the publisher best known for its Harvest Moon games, revealed its budget range for 3DS game development. According to the transcription of the call's Q&A session (as translated by 1UP), a Marvelous representative said that, "while costs vary based on game content," the company would spend an estimated ¥50 million to ¥150 million ($600K to $1.8M) on the development of a single 3DS game. Currently, Marvelous has two 3DS projects in the works, a Harvest Moon game and a zoo sim called Animal Resort. Not surprisingly, Marvelous' 3DS spending money is significantly higher than the ¥4.4 million to ¥43.9 million per title (roughly $50K–525K) Japanese companies spent on developing (regular) DS games last year, according to data gathered by TGS sponsor and promotional organization CESA. More interestingly, Marvelous' ¥150-million cap for a 3DS game represents a figure more than double the cost of the last year's most expensive Japanese PSP title, which, while unnamed, cost ¥59.2 million to develop by CESA's account. (The cheapest PSP game cost its maker just ¥3 million.) If Marvelous' budget is indicative of other companies' 3DS game costs -- and, certainly, some of these guys are likely to splurge -- then developing for the platform could prove more expensive than for Wii, where last year's most expensive Japanese project topped out at ¥116 million. In an era when budget gaming is dominating the handheld market, and following the disastrous combination of costly PSP game development and rampant piracy, the 3DS could be as ill-fated as the 3D technology that requires you to wear glasses. Well, that, or it'll just "print money" ... in 3D.
Microsoft to spend one billion dollars advertising Kinect and Windows Phone 7
Microsoft's serious about making Kinect a success. A $500 million kind of serious. That's the latest report, courtesy of the New York Post, on the change Steve Ballmer and company intend to drop to make sure that every living and breathing creature in the US knows about the controller-free controller this holiday season. That mirrors earlier analyst estimates placing the Windows Phone 7 marketing budget at a similar figure, which in total would amount to a cool billion dollars in advertising expenditure. We already know Microsoft's scooped the Old Spice Guy for WP7, but Kinect is getting the extra special carpet bombing treatment with Burger King, Pepsi, YouTube, Nickelodeon, Disney, Glee, Dancing with the Stars, People and InStyle magazines, and even Times Square all having a role to play in spreading the word. Yup, it's gonna be pretty hard to miss it.
FCC set to approve rules compelling carriers to alert you when you're about to go over your limit
Politicians do love themselves a sharp and emotive turn of phrase, of which few are as good as "bill shock." That's the term the FCC has used to sum up all those instances when you've had unexpected surcharges on your monthly wireless bill, caused by unknowingly going outside the bounds of your geographical coverage or monthly allowance. Seeing this issue as something it could help alleviate, the Commission set up a Consumer Task Force back in May in an effort to seek out solutions, and now it has returned with perhaps the most obvious one: getting your network operator to shoot out a voice or text message warning you when you're about to incur costs outside of your normal plan. That's basically what AT&T already does with iPad owners approaching their monthly data limits, which the federales see as a good practice that should be extended across all carriers. We can see no good reason why it shouldn't.
Analyst: Apple has created 'overwhelming' lead for iPad
Now, let's be honest: the burgeoning tablet market is not a race. But if it was, says analyst Chris Whitmore of Deutsche Bank, the iPad would be winning. We're going to see quite a few tablet devices come to market before all is said and done, including the Blackberry PlayBook and products from manufacturers like Dell, Microsoft, and maybe Google. Even after those other tablets come out, Whitmore says the iPad's lead is going to be tough to overcome quickly, if ever. "We expect the slew of upcoming competition to fall flat from a user experience standpoint while struggl[ing] to materially undercut the iPad on price," Whitmore reported. User experience is a no-brainer -- that's something Apple has always done well, and it's arguable that the iPad is its finest hardware from an accessibility standpoint. But price is something else; Apple has made deals and even manufactured its own chip to create the tantalizing mix of performance and cost found in the iPad. Other manufacturers will have trouble doing the same, especially with the lead Apple already has. According to Whitmore, the App Store has also given Apple a head start on applications, deals with media companies have brought big-name content to the platform, and a slew of competition versus Apple's one-device strategy will create problems for anyone attempting to climb the tablet mountain. That's not to say that there can't be another successful tablet, it's just that if anyone wants to have another iPad, they've got a lot of work ahead of them. That's not surprising -- Apple has already reaped the benefits of its early grab at a tablet-style computer, and there are much more earnings where those came from. [via MDN]
Has the iPhone App Market already crashed?
At GDC Europe earlier this week, Bigpoint CEO Heiko Hubertz claimed that the iPhone app market "has already crashed. You cannot sell your game for 99 cents and expect a return." Apple has said that developers are collectively making more than a billion dollars on the App Store, but Hubertz knocks that figure down a few notches, suggesting that because there are over 250,000 actual apps on the store, no one developer is making enough to cover the development costs of any game worth making. Is he right? In a sense, he is -- it's already pretty clear that for a number of reasons, prices have raced to the bottom on the App Store. And while the audience is still growing (people are buying more and more iPhones every day), so is the pool of developers and apps. While there are definitely some runaway hits, the average developer isn't going to see profits that will keep an EA-level game afloat. That said, the market certainly hasn't "crashed." Apple wanted an app ecosystem that anyone with a Mac and some knowledge and time could join, and that's what they've got -- a developer who puts a worthy amount of time and talent into an app, with some help and promotion from sites like ours, can likely turn over a profit, if not make a good amount of money. Sure, the App Store's not very friendly to big budget producers, but that's probably not what Apple wanted in the first place anyway.
Star Trek Online adds more C-Store options and controversy [Update]
There's a pattern that seems to repeat itself every time Cryptic adds new items to Star Trek Online's C-Store -- or at least, a sequence of events wherein players are at first excited, then angry or annoyed when the prices are revealed. A bunch of new items have been added to the store: two additional costume slots (not on the website at the moment), two additional ship slots, and two additional bridge officer spots. The trouble arises with the handling of the upgrades, particularly with the new costume slots, as they're counted on a per-character basis. A similar upgrade is available in the store for Champions Online, for the exact same price -- but it increases the number of costumes available on every character rather than just the character it's purchased on. The per-character upgrades, coupled with a reduced importance for costumes in Star Trek Online, all help make many players feel a bit shorted by the price tag. Others are arguing that the add-on is only $2.50, an argument that's gone on at length on the official forums. Controversy is nothing new to the game, but this much debate over a fairly minor item leads one to be a bit curious about what reception future items might find. [Update: Cryptic has contacted us with news on upcoming changes to this system, "We're going to change the way the costume slot purchases work so they become account-wide rather than per-character. And, of course, our customer service department will be able to assist anyone who purchased the upgrade multiple times to cover multiple characters."] [Thanks to Cap for the tip!]
Will we pay more for magazines on the iPad?
Business Insider has a post up from AdAge about magazine pricing on the iPad, and they've got bad news for anyone planning to transfer all of their magazine subscriptions to Apple's magical device: It'll cost ya. While a year's worth of Popular Mechanics goes for $12 from the publication's website (or even cheaper if you can pick it up from Amazon or that random kid wandering your subdivision selling subscriptions), the iPad subscription will cost $29.95; that's over twice as much. You can buy a year's worth of Wired on Amazon for just $10, but one issue on the iPad costs you half of that. Why? At first, the cost seems like a ripoff; publishers don't have to pay for paper, ink, or postage, so you'd think the content should actually be cheaper. Then you calculate in the cost of interactive designs and features, researching new technologies, and creating new workflows, and creating an iPad version of the magazine starts to get more expensive. Throw in that publishers are wary of pricing their content too low, and you get a higher price than a print subscription -- which plenty of readers will probably pay anyway. That's a pretty fragile pricing state, though; e-books are already cheaper than their print versions, and while comic books are the same price in the store as they are on something like the Marvel application, you have to think that those prices will drop too. As usual, early adopters will pay the most, but I wouldn't be surprised to see the price of "e-magazines" drop as publishers and consumers alike even out the rough edges of the transaction.
iPad component cost re-estimated
Now that the iPad is actually out and we know what's in it, iSuppli has adjusted its guesstimate for the actual price of the hardware to US$259.60. That's significantly more than the original estimate that was made a while back; iSuppli says that the iPad uses more silicon chips than expected, including three separate chips to control the touchscreen itself. That price is the 16GB Wi-Fi model (that retails for $500); the higher memory models obviously cost more (up to $348.10 for the 64GB Wi-Fi model). Still, Apple is making a solid profit on the per-unit price. There's no question that the iPad will make money no matter what, but there are tons and tons of other factors to include in this. On the flip side of the equation, this price doesn't include shipping out iPads to all of Apple's various stores, money to pay employees, and of course, all of the backend software and hardware design that went into actually creating these devices in the first place. Of course, in terms of profit, the price that you pay for the device at checkout is just the beginning; there's a lot of money also flowing over the App Store, and in iBooks and so on. Just looking at the hardware costs won't get you very far. Apple has money moving all over the place around this device.
The cost of Apple's products, adjusted for inflation
A site called VoucherCodes recently tried to figure out if the $499 entry-level iPad really is as good a deal as many have claimed. They analyzed the cost of several of Apple's products, adjusted for inflation, and some of the results are pretty astonishing. The first Apple computer ever created, the Apple I, cost $666.66 in 1976. Adjusted to 2010 dollars, that Apple I would cost $2,540, which isn't too bad. But the Apple Lisa, Apple's first stab at creating a computer with a Graphical User Interface, cost $9,995 in 1983, or a staggering $21,745 in today's dollars. Sure, the GUI was a cool bit of innovation, over $20,000 for a personal computer? Comparing the iPad to previous Apple portables is even more interesting. Apple's first portable computer cost $6,500 in 1989 -- which would be almost $11,400 today -- while the $699 Newton from 1993 would cost nearly $1,050 in today's dollars. Most intriguing of all is that the first iPod, released for $399 in 2001, cost $488 in today's dollars. That's just $11 under the cost of the iPad, a device that has far more storage, processing power, and access to more features than the first iPod could even dream of only nine and a half years ago. Apple's handhelds are cheaper than ever, even when you bring inflation into the mix. Within my lifetime alone, computers have gone from luxury items and objects of curiosity, something people would have to save several months of paychecks in order to buy, to something people buy on a whim, for a week's pay, and carry around with them in their pockets. It's not surprising that the cost of computers has come down over time, but when charts like the one at VoucherCodes drive home just how much prices have dropped in terms of the real value of the US dollar, it's pretty amazing.
