iconmaster
Banned
Since when? Where are you getting this?
I'm quite willing to believe it but AFAIK there has been no real information on that. Do you have something more than fanmade component price lists and rampant speculation?
-
Hey, guest user. Hope you're enjoying NeoGAF! Have you considered registering for an account? Come join us and add your take to the daily discourse.
MS is taking a loss on both Xbox Series X and S
- Thread starter Craig of War
- Start date
Since when? Where are you getting this?
I'm quite willing to believe it but AFAIK there has been no real information on that. Do you have something more than fanmade component price lists and rampant speculation?
Grinchy
Banned
Is it true? Who knows. But it does feel like MS is taking the Amazon approach from here on out. They are investing hard with losses so that they can buy consumer mindshare, so that eventually, one day, their subscription service will be profitable.
The hardware prices, the costs of paying for games to appear on game pass, the cut they are giving EA for Access, the cut they are giving to the company that is loaning people money to finance the system, ect. It all adds up to what can't be much left for themselves, if anything at all. But, one day, if this move is successful, game pass and game streaming will be the norm and they will be the ones collecting the checks themselves.
The hardware prices, the costs of paying for games to appear on game pass, the cut they are giving EA for Access, the cut they are giving to the company that is loaning people money to finance the system, ect. It all adds up to what can't be much left for themselves, if anything at all. But, one day, if this move is successful, game pass and game streaming will be the norm and they will be the ones collecting the checks themselves.
Craig of War
Banned
Here read this article it explained why console are sold at a loss with details.
:max_bytes(150000):strip_icc()/shutterstock_233650261-5bfc361446e0fb00517de447.jpg)
The Economics of Gaming Consoles
Margin levels for both gaming consoles and games collectively is a central component for gaming business management and analysis.
Last edited:
Abriael_GN
RSI Employee of the Year
We'll see. That's my gut feeling (educated by mostly extensive experience with Japanese companies, but again, that's not the word of God). At the moment, we don't really have much more to go on.
Last edited:
Maddux4164
Member
Taking a loss on hardware is common place. They’ll make their money in software sales and services like PSN/LIVE.
The only company I recall that didn’t take a hardware loss was 3DO. Because they had other manufacturers making their own hardware. We see that didn’t turn out well. A $700 console in 1993.
The only company I recall that didn’t take a hardware loss was 3DO. Because they had other manufacturers making their own hardware. We see that didn’t turn out well. A $700 console in 1993.
The Shepard
Member
It's called the loss leader strategy, make small loss on consoles gain it back on game and MTX revenue. Being happening for years.
Nintendo don't tend to sell at a loss and I'm sure the ps4 made a small profit even at launch. Maybe even the xbox one.
Nintendo don't tend to sell at a loss and I'm sure the ps4 made a small profit even at launch. Maybe even the xbox one.
Birdo
Banned
Sony took a $60 loss on every PS4 at launch.
MS confirmed a loss on XBox One at launch, but a number was never given.
iconmaster
Banned
Here read this article it explained why console are sold at a loss with details.
The Economics of Gaming Consoles
Margin levels for both gaming consoles and games collectively is a central component for gaming business management and analysis.www.investopedia.com
That's just another article taking as gospel unofficial teardown and pricing estimates (in this case, one from iSuppli for the PS3 in 2006).
Actually, I'm not sure you could find any of the major console manufacturers ever admitting to selling at a loss (edit: Sony admitted it on the PS3, after the fact). Phil Spencer came close, but not quite.
What I objected to was your use of the phrase "common knowledge." I submit it's not common knowledge; it's a common assumption. An educated guess, at best. It's one I'm willing to maintain into the new generation, but it's still only an assumption.
You might have in mind the interview I just linked. Unless you know of another, it seems like they never did.
Last edited:
Sure it did with creative accounting as they say. That thing sold for more than it was manufactured for.
MH3M3D
Member
The leap is big enough for it to count as a brand new console with new features. Parents, younger gamers and casuals are all aboard. Volkswagen sells more than Ferrari, because sometimes its enough just to get from A to B with the money you have.
Gaming Discussion
Video game news, industry analysis, sales figures, deals, impressions, reviews, and discussions of everything in the medium, covering all platforms, genres, and territories.
Last edited:
Ass of Can Whooping
Gold Member
Sony will do the same, and it can be a pretty large loss if they feel the need
Ass of Can Whooping
Gold Member
Gaming Discussion
Video game news, industry analysis, sales figures, deals, impressions, reviews, and discussions of everything in the medium, covering all platforms, genres, and territories.
Last edited:
If people want to get fired sure. Tell stock holders today eat 250 dollar losses now for gains in 5 years and you will be shown the door like the PS3 crew. It is fantasy island around here I swear. Sony fan warriors beating their chest exclusives this SSd that no one will buy a Microsoft console. Then beg Sony to lose billions to under cut them out of fear lol. Sony could sell the PS5 for 549 and 499 still get 70% market share. Get some confidence in your product!
Last edited:
The Shepard
Member
That's supprised me. I'm sure I read somewhere sony made a small profit on ps4 somewhere around launch, I could obviously be mistaken.
Nintendo are the only company who don't do this then if that's the case, but maybe even they made a loss on one of there consoles along the line. I remember the gamecube being £80 with a game quite early on in that consoles lifespan and I bet the switch wasn't cheap to make at first.
prinz_valium
Member
Winner
Clear
CliffyB's Cock Holster
Kinda where I'm at. The way I see it is that PS+ likely makes Sony more money per user than GamePass does for MS, its simply a much cheaper service to operate. Maintaining that subscription headcount is going to be a huge deal for Sony, so if they need to take a one-time hit on the hardware... its likely not an unacceptable trade-off for them.
Playstation has its market-share to protect after all, so I wouldn't be surprised to see them going the extra mile to achieve that. Drawing comparisons with PS3 to me really misses the point of where Playstation makes its revenue these days, back in the PS2 to PS3 transition they went from basically no online sales, to a fledgling set of services. With PS4 they have a digital money-making powerhouse.
Last edited:
Michael Hawk
Member
Agreed, your analysis of casual consumer spending is perfect. It's why the Xbox One is currently crushing everything in sight because casuals are like "Why bother with anything else." Things like brand history, brand identity, product features, eco-system of compatibility and support, exclusive content in addition to the yearly FIFA/CoD piece etc. -- none of this nonsense matters.
Just one question though. What are the current sales figures of the Xbox One?
Ass of Can Whooping
Gold Member
God what's with these dumbass "bU ThE shareholders!" arguments
They don't dictate how Sony competes. It's time you learn what shareholders actually are.
Sony took huge losses at launch even with the PS2. And that would have been perceived as the riskiest launch for them. They're not shy from it
Last edited:
JLB
Banned
250 dollars over the Series S price.
A father of a typical family with two kids can almost return home with a console for each one.
The Pleasure
Member
yeah that's going to work when the S is the face of the Xbox where it looks significantly shittier than the PS5. You can either fight on price or on power, but if you try to have it both ways while having no exclusives or ways to show it you're gonna have your ass handed both ways. Microsoft doesn't get Burger King. They don't get to have it their way. They need to choose one and brace for impact.
Yes because Sony was so price aggressive this past 5 years lol. The 7 year old console is MSRP of 299.99. The ps4 pro embarrassing performance per dollar versus the one x. Making online play cost money. Your damn straight stock holders influence decisions. Keep thinking Sony will eat 250 dollars a device to match the series s in price lol.
Ass of Can Whooping
Gold Member
Lol you think stockholders are the reason they haven't budged the MSRP? They haven't budged because the console is still flying off shelves
A child would tell you to keep the price the same
Where are you even getting $250 from you muppet? All they need to do it put the damn thing at $400
Last edited:
Maddux4164
Member
Factually Sony took a loss on the PS3 for a while. Factually Microsoft took a loss on the original Xbox.
Companies do this. Why? So it’s priced in an area consumers will buy because these companies make money off accessories/software/services. It’s not all about a console sale. That’s simply the entry ticket into the park.
How do you think cell phone companies offer “free” phones on a trade -in or if you purchase 2 you get 1 free? It’s because they’ll bank on the back end of the deal.
As a finance manager for a used car dealership, I’ll happily sell you the car at my cost. Why? I’ll finance it for you, mark up the rate 2% and sell you a huge warranty.
Last edited:
Reallink
Member
At MS's bulk cost, the S's APU is probably $100-$150, the middle of the road 512GB NVMe ~$60, 10GB of slow RAM ~$50, the mobo, cooling, case, and packaging another $50. In raw BoM, they're much closer to breaking even on Series S than losing (if they're losing at all). The Series X probably adds +$50 to the APU, +$30 to the NVMe, +$50 to the RAM, and +$20 to the case and cooling, so they have a lot more wiggle room in terms of X's raw BoM.
Last edited:
Ass of Can Whooping
Gold Member
fermcr
Member
Microsoft will take a loss on every Xbox Series, and, Sony will take a loss on every PS5. This practice is pretty common, specially on console launch... Microsoft/Sony will recoup the money on software sales (30% on every 3rd party game) and services (Gamepass, PS+, etc).
Last edited:
_Spr_Drnk
Banned
MS are clearly desperate to win this gen and recall their glory 360 days, which were well earned at the time. This time round they've ensured technical superiority which is admirable, but they know that's still not enough to challenge Sony, so are using the mothership banked cash to buy the next gen. It stinks of desperation, and I'm pretty sure at best it will bring them parity.
But Sony knows how to utilise its studios. Microsoft are just making it rain on the cheapest hoes they can. They'll have a little cry-wank out the back car park when it doesn't work.
"Sob.. but I'm such a good guy".
But Sony knows how to utilise its studios. Microsoft are just making it rain on the cheapest hoes they can. They'll have a little cry-wank out the back car park when it doesn't work.
"Sob.. but I'm such a good guy".
Last edited:
iconmaster
Banned
I'll grant you that -- they admitted it later. But that doesn't guarantee it's true for every console in every generation.
Arrrrrgh, you people make me nuts sometimes.
DeadOblivion78
Member
fermcr
Member
anothertech
Member
You think they're taking a loss now. Wait till sales numbers this time next year.
It will impact PS5 price in a way, that we can probably forget that PS5 DE will be 399$
Ass of Can Whooping
Gold Member
They took a loss for the PS2, the PS3 and the PS4
They'll take a loss for the PS5 too. If they don't we'll be lucky to get a PS5 at $500. Not happening
Last edited:
Maddux4164
Member
These companies aren’t getting rich off a console sale. Again it’s games/services/accessories etc
Same goes for me as a finance manager for a car dealership
Same goes for Verizon/AT&T who give you FREE phones.
The physical hardware is simply to get you into their ecosystem of products and services. This isn’t hard to comprehend.
iconmaster
Banned
I comprehend it completely. It makes good intuitive sense. That doesn't mean it happens. And teardowns aren't evidence for it: none of us know what prices MS or Sony or Nintendo are really paying for their components. They get sweet bulk deals that we can only guess at.
So long as we all acknowledge we're guessing here (except where a manufacturer has actually confirmed something), I have no objection. It's the certainty that we know when all we have are assumptions that drives me up the wall. This is why journalism is bad, and the world is burning, and the Kardashians have a show that lasts over ten years.
Last edited:
Maddux4164
Member
Companies aren’t one to come out and say “hey we’re taking a wash on our products. Like us more please”
It’s how business works, so long as they get more on the software/service side. Which they will.
Explain how someone buys 1 iPhone, gets 1 free? AT&T had to purchase that phone and they buy it straight up retail price.
They’ll make money because you’ll pay them monthly to keep the damn phone activated on their towers
iconmaster
Banned
We're talking at complete cross-purposes. Sorry I couldn't explain it better.
Maddux4164
Member
AT&T factually makes $0 on phones. Absolutely a giant $0. They make even less when they give one away. They purchase from Apple at full on retail. No “sweet deal”.
Reallink
Member
Not really, more so educated estimates. Those memory speeds are likely GDDR5, and can be loosely sourced to run ~$50 for a 10GB package here in late 2020. 4000+Mbps NVMe drives sell to consumers for as low as ~$100/TB (with profits shared between retailers, the actual component manufacturer, and the brand that repackages it). A 2400Mpbs 512GB drive is not going to be expensive at MS's volume, sourced directly from the component manufacturer. The APU can be reasonably estimated from the die size and past console component prices. Truthfully the Series S's APU is probably much closer to $100 with the X's closer to $150, but I allowed a lot of leeway. New fab process nodes are more expensive, but you're only talking single or low double digit percentage increases, not 2x the cost. I'm only speaking to raw component costs, when companies talk about losses on hardware you have to consider whether they're discussing the BoM or are also rolling other expenses like R&D expenses into it. This is how Nintendo accounting can claim with a straight face that they're losing money on their outdated hardware with 100%+ profit margins over the BoM, they front load the R&D expenditure.
Last edited:
DaGwaphics
Member
^ The ram in all the consoles announced appears to be gddr6 14 gbps. Total bandwidth is controlled by the number of controllers and chips in use, gddr5 would net lower results in these specific configurations.
JoeyWestSide
Member
It helps to take a loss of you know that you're going to get paid for the next 2 years via payment plans. Debt in the short term is worth steady money in the long term.
MagnesG
Banned
Switch was estimated to be factory produced around $257 during the launch.
If I'm not mistaken only the old 3ds was sold at loss following the price cut because of the backlash due to the exorbitant $250 launch price ($150 after that) but the rumor is that they managed to recoup the cost real quick just months after.
