Xbox Xbox losing ~$150 on every Xbox Series sold (after price increase)

[cm2]

read this tweet:

https://twitter.com/x/status/2082209531082248635

 

[Demon_Skeith]

They always sell consoles at a loss, nothing new.

 

[TheRavenfreak]

And there's another price hike coming soon I believe. I really wish I just saved up more money in the past to get a Series X at this point. It's better to get one second hand. It's a shame, I've preferred Xbox consoles since the 360 era since Microsoft was always good about backwards compatibility. (Nintendo hasn't always been good about it and neither has Sony.)

 

[cm2]

Switch 2 backwards compatibality is great though. Nintendo continues to update Switch 2 firmware to run Switch 1 games nicely.

 

[Dead2009]

And there's another price hike coming soon I believe. I really wish I just saved up more money in the past to get a Series X at this point. It's better to get one second hand. It's a shame, I've preferred Xbox consoles since the 360 era since Microsoft was always good about backwards compatibility. (Nintendo hasn't always been good about it and neither has Sony.)

You couldnt play every OG Xbox game on the 360, and couldnt play every 360 game on the Xbox One/Series (they literally started putting OG Xbox games on the Series storefront about 2 years ago too). So in hindsight, they were in the same spot as Sony and Nintendo when it comes to not playing every BC game.

 

[froggyboy604]

Hopefully, Xbox won't raise the price even more or use cheaper lower quality console parts to build consoles because Xbox is losing $150 on each Series X/S sold.

 

[TheRavenfreak]

You couldnt play every OG Xbox game on the 360, and couldnt play every 360 game on the Xbox One/Series (they literally started putting OG Xbox games on the Series storefront about 2 years ago too). So in hindsight, they were in the same spot as Sony and Nintendo when it comes to not playing every BC game.

They're not exactly the same though, Sony dropped full backwards compatibility with the PS4, you couldn't play PS3 games on the console. The Switch obviously couldn't be backwards compatible with the Wii U but at least all the decent Wii U games got ports to the Switch. Microsoft did better with backwards compatibility even if every original Xbox game wasn't backwards compatible on the 360 or if every 360 game wasn't backwards compatible on the Xbox One. Heck later PS3 models can't play every single PS1 game, my favorite RPG on the PS1 freezes on later PS3 models because the emulation core Sony used wasn't accurate. Sony finally realized that there's a market for backwards compatibility with the PS5 and added support for most PS4 games on the console. But now I would say Nintendo is number one when it comes to backwards compatibility for this gen at least. There's only a handful of Switch games you can't play on the Switch 2.

 

[Legend]

They always sell consoles at a loss, nothing new.

Exactly. Nothing new.

 

[cm2]

They always sell consoles at a loss, nothing new.

Yeah for PS and Xbox (but not always for Nintendo lol), I posted that because there was no info on the amount Xbox loses per console sold after the price hike before.

 

[Legend]

Yeah for PS and Xbox (but not always for Nintendo lol), I posted that because there was no info on the amount Xbox loses per console sold after the price hike before.

There were reports of how much they lost, it's just being buried in the algorithm. Even I know this.

Even before this report, I remember Microsoft saying that they lost money on every console sold.

Here's Xbox Series consoles in 2022:

Xbox boss Phil Spencer has said Microsoft loses between $100 and $200 on every Xbox Series X and S sold.

As reported by CNBC (and spotted by Eurogamer), Spencer said at WSJ Live that Microsoft subsidises the cost of its Xbox consoles with the expectation that people will spend money on its profitable add-on products later.

Losing $100 to $200 per console is a fairly significant amount given the Xbox Series X retails for $499 and the Xbox Series S retails for $299, but consumers then purchasing additional controllers, headsets, games, and subscription services like Xbox Live and Game Pass is seemingly enough to justify the hit on day one.

Spencer has admitted that Xbox can't maintain these console prices forever though, and its main competitor in Sony has already raised the price of the PlayStation 5 in Europe, the UK, the Middle East, Africa, Asia, Latin America, and Canada.

"I do think at some point we'll have to raise the prices on certain things, but going into this holiday we thought it was important to maintain the prices," Spencer said in October.

That's not to say there are currently plans or timings in place to increase the prices, however, at least for consoles, as Spencer said in September that Microsoft currently has no plans to increase the price of the Xbox Series X or S.

Source: IGN

The current A.I. models are using the internet to find this stuff, here's CNET in 2013:

It’s a thin line between profit and loss: the retail price of the Xbox One is just $28 higher than the cost of parts and manufacturing, leaving Microsoft with little to take home.

Microsoft sells each Xbox One for $499 after spending $471 to build it, according to a peek inside Microsoft’s new gaming console by research firm IHS, as shared with AllThingsD.

The cost to build an Xbox One is $90 more than the $381 Sony spends on its PlayStation 4, which costs consumers $399. That leaves Sony with an $18 profit on each unit.

“If your cost is within $10 to $20 of the retail prices, there’s very little chance you’re making a profit on the console,” IHS analyst Andrew Rassweiler said when the firm released its PS4 teardown.

What drives up the manufacturing costs of the Xbox One?

The Kinect is priced at $75, but the most expensive component is the AMD microprocessor at $110. Similar to the AMD chip in the PS4, the processor in Microsoft’s console combines both a CPU and graphics processing unit (GPU) to tackle the heavy graphics load that Xbox One games demand.

Memory chips add another $60 to the manufacturing cost, while the parts used to assemble the Xbox One console kick in another $332, according to IHS.

So how will Microsoft turn a decent profit on the Xbox One deal? Like Sony, Microsoft expects to make money on game sales. Down the road, the cost of components will drop. However, Microsoft could counter that by lowering the price of the console.

“That’s the way it happened with prior versions of both the Xbox and the Playstation,” Rassweiler told AllThingsD. “Microsoft could eventually eke out a break-even scenario. But they’d probably use it as an opportunity to cut the retail price, in hopes of selling more.”

Clarification, 6:59 a.m. PT: Although this story correctly cited the retail price ($499) and the manufacturing cost ($471) of the Xbox One, it inadvertently misstated the relationship between those dollar values. The manufacturing cost is, of course, $28 lower than the retail price.

Article Source: CNET

But here's the problem, once manufactured, there's shipping costs associated with that. There's distribution costs - which means, from the shipping bays, to retail. At retail, they pay for the console, but to keep it on the store shelves, that's another cost - because once you pay the manufacturer, then the retailer has to sell this. If this does not get sold, it costs the retailer money, so any unused stock is resold back to the manufacturer. So Microsoft ends up losing money, anyway. This was true with PS3, I remember the C.E.O. saying this straight up to retailers: "If you're not selling your PS3's, we'll buy that back from you." I imagine this worse today than back then.

Researchers from electronics supply chain iSuppli have estimated, in a new analyst report, that the new Xbox 360 console is being sold at a loss of $127 to Microsoft. Analysis of the console by iSuppli has found that, according to them, the materials inside the unit cost $470 before assembly. Additional items packaged inside the premium $399 Xbox 360 package, including the power supply, cables and controller, adds another $55 to the cost, resulting in a loss of $126. This figure is apparently assuming considerable discounts on the components and does not take into account marketing, distribution and other extraneous costs. Regarding the original Xbox console, iSuppli estimates that it was sold at a loss of $24 at a retail price of $299, although this is actually significantly lower than most other estimates. Sony consoles are also traditionally sold at a loss, although revisions to manufacturing techniques and a lowering of components costs has previously seen hardware sales move into profit after a year or two on the market. An unnamed Microsoft spokeswoman, talking to Business Week Online, has stated that Microsoft is planning for a “gross margin neutral” strategy in 2006, with profits expected to begin in 2007, as hardware costs lower and sales of more expensive next generation games software and accessories makes up the deficit.

Article Source: Game Developer

My thesis is fact with Phil Spencer being quoted as saying...

“Consoles as a business model, in the overall scope of gaming, is fairly small relative to the places people play. Consoles evolved to a business model much different from phones where consoles are actually sold at a loss in the market. So when somebody goes and they buy an Xbox at their local retailer we’re subsidizing that purchase somewhere between a hundred and two hundred dollars, with the expectation that we will recoup that investment over time through accessory sales and storefront.”

Full Story is at GameSpot.

Now, the original Xbox... The name "Xbox" is so ambiguous, that it's buried into the algorithm, like I said.

 

[cm2]

Yeah there were many reports on the amount of xbox and sony loses per console sold but all of those reports/articles were during the more normal era and not during this era of Ramageddon price hike. Specifically the amount after the recent xbox price hike due to Ramageddon.

 

[Grungie]

They're not exactly the same though, Sony dropped full backwards compatibility with the PS4, you couldn't play PS3 games on the console. The Switch obviously couldn't be backwards compatible with the Wii U but at least all the decent Wii U games got ports to the Switch. Microsoft did better with backwards compatibility even if every original Xbox game wasn't backwards compatible on the 360 or if every 360 game wasn't backwards compatible on the Xbox One. Heck later PS3 models can't play every single PS1 game, my favorite RPG on the PS1 freezes on later PS3 models because the emulation core Sony used wasn't accurate. Sony finally realized that there's a market for backwards compatibility with the PS5 and added support for most PS4 games on the console. But now I would say Nintendo is number one when it comes to backwards compatibility for this gen at least. There's only a handful of Switch games you can't play on the Switch 2.

The thing is that backwards compatibility isn’t as simple as people act like it is. The PS3 has a really weird architecture and made it difficult to program for (remember how the PS3 sold really slow for awhile and the Xbox multiplats used to perform better?). They knew they fucked up and made the PS4’s architecture more similar to a PC, but that made it impossible to make the PS4 backwards compatible without making it more expensive. On top of the hardware not able to easily emulate it

It also looks hypocritical to praise Xbox for not being compatible with all Xbox games and then in the same breath complain about how the PS3 didn’t support all PS1 games

 

[TheRavenfreak]

The thing is that backwards compatibility isn’t as simple as people act like it is. The PS3 has a really weird architecture and made it difficult to program for (remember how the PS3 sold really slow for awhile and the Xbox multiplats used to perform better?). They knew they fucked up and made the PS4’s architecture more similar to a PC, but that made it impossible to make the PS4 backwards compatible without making it more expensive. On top of the hardware not able to easily emulate it

It also looks hypocritical to praise Xbox for not being compatible with all Xbox games and then in the same breath complain about how the PS3 didn’t support all PS1 games

It's not hypocritical to point out when one company does a feature better than another one. The Xbox 360 consistently was compatible with the same original Xbox games with each model that was released, whereas the PS3 eventually stopped supporting PS2 discs all together in later models and the PS1 emulation was mid since it couldn't properly play all PS1 games. A company like Sony should be able to make an accurate emulator for their older games, but since they were shifting their focus to working on the PS4 they probably didn't bother with it since they're a company and they want to do what's best to make money. I know backwards compatibility isn't easy to achieve, but that's why I've praised Microsoft for working on getting older games to be playable again on modern hardware even if they can't and won't try to get every single Xbox or Xbox 360 game to be compatible on the Series X/S. At least Sony did make the PS5 backwards compatible with the PS4.

 

[Grungie]

It's not hypocritical to point out when one company does a feature better than another one. The Xbox 360 consistently was compatible with the same original Xbox games with each model that was released, whereas the PS3 eventually stopped supporting PS2 discs all together in later models and the PS1 emulation was mid since it couldn't properly play all PS1 games. A company like Sony should be able to make an accurate emulator for their older games, but since they were shifting their focus to working on the PS4 they probably didn't bother with it since they're a company and they want to do what's best to make money. I know backwards compatibility isn't easy to achieve, but that's why I've praised Microsoft for working on getting older games to be playable again on modern hardware even if they can't and won't try to get every single Xbox or Xbox 360 game to be compatible on the Series X/S. At least Sony did make the PS5 backwards compatible with the PS4.

You do know the reason why they stopped making the PS3 backwards compatible with PS2 games right?

The hypocrisy was that you praised the Xbox platform for supporting many, but not all games for backwards compatibility, but criticized the PS3 for supporting many, but not all PS1 games, especially your favorite game.

The Xbox backwards compatibility isn’t as amazing as you think it is. Some games got updates and actually run better, but many didn’t, and there’s several that have glitches and frame drops. Wait… that sounds like the same issue that the PS3 has…

I would suggest you look into the Xbox compatibility situation, because outside of select games having upgrades on the newer Xboxes, a lot of games are as varying in support like the PS3’s PS1 emulation.

 

[Legend]

The thing is that backwards compatibility isn’t as simple as people act like it is. The PS3 has a really weird architecture and made it difficult to program for (remember how the PS3 sold really slow for awhile and the Xbox multiplats used to perform better?). They knew they fucked up and made the PS4’s architecture more similar to a PC, but that made it impossible to make the PS4 backwards compatible without making it more expensive. On top of the hardware not able to easily emulate it

It also looks hypocritical to praise Xbox for not being compatible with all Xbox games and then in the same breath complain about how the PS3 didn’t support all PS1 games

I'm so glad that I'm not the only person who's gonna see all this. Because, its true. PS3 had a weird architecture, it was difficult system to program for. It's like people forgot how sparse games were on PS3. I was told that the PS3 doesn't have many games, I persevered and PS3 ended up being the victor in the war for consoles. The only reason why Xbox 360 succeeded where PS3 failed was the year head start Microsoft had with it. And they made it pretty easy to develop for, but tech wise, they rushed on a few factors - like security for Xbox 360 was so bad, that Microsoft lost money on the RRoD fiasco. Kinda like PS2, with the issues. Difference is, Sony sold MORE.

In my opinion, PS3 is the best console ever for how technical it is. I'm not merely talking about PS2 levels of software, I'm talking about how powerful the machine actually is. I guarentee you, that the console was not maxed out, unless you're talking about a few games - like God of War 3. MGS4 could theoretically run on any platform from PS3/Xbox 360, but Konami decided to wait until 2 generations to do a really good port of MGS4 with the new MGS Master Collection Vol. 2. I could say the same for Black Ops 2 that just released on current consoles. BO2 is such a beautiful game. And PS3 did it well.

How do I know this? Bro, Nintendo Switch is basically the power of a Xbox 360/PS4.

THE only reason why MGS4 is not on Xbox 360, Kojima said it. So... there's no excuse. Kojima said that the Disc size of Xbox 360 was small when compared to 50GB/100GB Blu-Ray. And on top of THAT... HDD (Hard drives) was really, really slow for fetching the disc on MGS4. You'd have to wait HOURS just to get it installed, and even if you get to game menu and get into the game - 30 minutes at best to get to the game itself. AND/OR cutscenes.

MGS4 was exclusive to PlayStation, not for the reasons you think. But it was exclusive to PS3 at the time.

 

[Grungie]

I'm so glad that I'm not the only person who's gonna see all this. Because, its true. PS3 had a weird architecture, it was difficult system to program for. It's like people forgot how sparse games were on PS3. I was told that the PS3 doesn't have many games, I persevered and PS3 ended up being the victor in the war for consoles. The only reason why Xbox 360 succeeded where PS3 failed was the year head start Microsoft had with it. And they made it pretty easy to develop for, but tech wise, they rushed on a few factors - like security for Xbox 360 was so bad, that Microsoft lost money on the RRoD fiasco. Kinda like PS2, with the issues. Difference is, Sony sold MORE.

The black spot in Sony’s backwards compatibility history is really because the PS3 was weird and was a bitch to program for.

I was just annoyed seeing Xbox get sung to high heavens for only having a select amount of games be backwards compatible, with some of them having performance issues, but the PS3 gets slammed for its support of PS1 games despite having a higher percentage of games being supported all because their favorite game didn’t work.