Microsoft sells Xbox 360 below cost?

Although Microsoft officials swear by the Xbox 360 retail price enough to compensate for all manufacturing costs, the two reputable US market analysts have different views .

Main board of Xbox360

They claim Microsoft sold the Xbox 360 below cost and will lose a lot of money because of the grandiose Xbox 360 mission.

Immediately after the Xbox 360 was sold, the market research firm Portelligent proceeded to 'split' a simplified Xbox 360 that cost $ 300 to estimate manufacturing costs. After scrutinizing every component of the machine, Portelligent experts say that the minimum price to build a simple Xbox 360 must be at $ 310 per device. This means that every simple Xbox 360 is sold, Microsoft has a minimum loss of 10 USD.

Market research firm iSuppli has done the same job as Portelligent did, but the target is the Xbox 360 Premium, which means that the "full" Xbox 360 is fully equipped with all the components. After "full" operation of the Xbox 360, iSuppli experts estimated that the minimum price of the Xbbox 360 hardware should be around $ 525, which is far above Microsoft 's selling price of $ 400.

Analysts believe that Microsoft does not have to bear the loss of selling below this cost alone, because component suppliers can wholesale parts to Microsoft at very cheap prices. In addition, Microsoft clarifies that Microsoft is willing to suffer a bit due to hardware costs but will compensate with huge game sales.

The most expensive components of Xbox 360 are electronic chips inside the machine. iSuppli estimates that the total value of electronic chips in the Xbox 360 will be about $ 340. The central processor of the Xbox 360 is IBM's PowerPC processor, which consists of 3 processing cores that cost up to 106 USD. ATI graphics processing chip is the most expensive chip in Xbox 360, it costs up to 141 USD.

In addition, other devices such as disk readers, DRAM memory, wireless devices, gamepad sets, etc., will easily push Xbox 360 prices to over $ 500.

Isuppli calculated that IBM could sell PowerPC microprocessors to Microsoft at a low price especially with the ambition to be a central processor chip provider for well-known professional gaming machines. PowerPC processor chips are also equipped for Sony's latest gaming machines such as PlayStation 3 and Revolution.

In June 2006, Sony will officially sell the PlayStation 3 with superior specifications over Xbox 360. But especially, Sony has offered the PlayStation 3 at a price that is "terrifying". $ 300 and $ 400, the same price as the Xbox 360.

HOANG KIM ANH