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SPOOFE wrote: Profit in the console business comes from software, not hardware. I doubt ANY of the big-three manufacturers will take less than a $300 loss on each system sold.

That sounds unreasonably high; what is MS/Sony/Nintendo's margin on a game that wholesales for $30-$50? How many games does the average gamer buy for one system?

SPOOFE wrote:Profit in the console business comes from software, not hardware. I doubt ANY of the big-three manufacturers will take less than a $300 loss on each system sold.

Where's the precedent for this sort of capital losses? During the last round of the console wars, Sony and Nintendo both broke even or better on their consoles. Only Microsoft practiced price-dumping, and they were also the only ones who didn't turn a profit last time around.

It's always been true that profit was SMALL on the console itself, but I think after MS price-dumped on Xbox that's been transformed into everyone taking a loss. Main profit has always been games, not consoles, but I was certain only MS has taken more than an (initially) $50 loss per unit.

The Dude wrote:That sounds unreasonably high; what is MS/Sony/Nintendo's margin on a game that wholesales for $30-$50? How many games does the average gamer buy for one system?

It depends what their involvement with the game is.

At the least they get a lump sum lisencing fee from the game's publisher that gets them the official badges, stickers and testing/support.

If they also publish the game themselves, they probably get the lions share of the revenue from it. (which is nice when it's something like Gran Turismo or Halo 2)

SPOOFE wrote:

I thought they bit the price on the X-Box so that the next gen they could make a profit off the system because of an already established fan base.

Profit in the console business comes from software, not hardware. I doubt ANY of the big-three manufacturers will take less than a $300 loss on each system sold.

Wow. You're outright delusional. Even the X-box of last cycle was only a fifty-dollar loss. Furthermore, there were no signs the Gamecube and PS2 were losses.. Though they weren't large profits.

SPOOFE wrote: Profit in the console business comes from software, not hardware. I doubt ANY of the big-three manufacturers will take less than a $300 loss on each system sold.

http://red-mercury.com/mmceo/mmceo_current.html

Nintendo made a profit on every system sold. Sony sold to break even on the hardware. Microsoft lost about $50 on every XBox sold. Microsoft lost on average $200 million each quarter, with some quarters as high as -398 million....

$300 loss? That would KILL any company. Considering that Microsoft likely lost well over a BILLION overall from the 2003-2004 numbers I've seen (five quarters at around -$200, one at about -$400, one at -$150, and one at +$80), anyone selling at a $300 loss would be committing suicide.

The Dude wrote:

SPOOFE wrote: Profit in the console business comes from software, not hardware. I doubt ANY of the big-three manufacturers will take less than a $300 loss on each system sold.

That sounds unreasonably high; what is MS/Sony/Nintendo's margin on a game that wholesales for $30-$50? How many games does the average gamer buy for one system?

The article in my previous post said around $5-$10 profit margin on average.

Nintendo made a profit on every system sold. Sony sold to break even on the hardware. Microsoft lost about $50 on every XBox sold.

I stand corrected. I recalled an old article that said MS needed to sell something like twelve games for each console in order to turn a profit. Misinformed. Apologies.

SPOOFE wrote:

But I suppose this is Bill Gates' big dream. To have huge all purpose media centers, so Microsoft can have a monopoly, not only in software, but in home entertainment as well...

Right, because Microsoft is the only company trying to do it... have you forgotten Sony's attempt to push a Media Center PS2, complete with DVD-RW and video recording?

No, and I didn't like that idea any better. However, I read a while ago in a magazine that Bill Gates believed Media Centers which could do everything home entertainment-related is the future. Looks like this new Xbox will be a step in the direction of his vision.

Praxis wrote: $300 loss? That would KILL any company. Considering that Microsoft likely lost well over a BILLION overall from the 2003-2004 numbers I've seen (five quarters at around -$200, one at about -$400, one at -$150, and one at +$80), anyone selling at a $300 loss would be committing suicide.

According to this article, the Xbox lost upto $125 per unit.

Also the Xbox division was given $2 billion to try and unseat Sony as the lead console maker...

ggs wrote:

Praxis wrote: $300 loss? That would KILL any company. Considering that Microsoft likely lost well over a BILLION overall from the 2003-2004 numbers I've seen (five quarters at around -$200, one at about -$400, one at -$150, and one at +$80), anyone selling at a $300 loss would be committing suicide.

According to this article, the Xbox lost upto $125 per unit.

Also the Xbox division was given $2 billion to try and unseat Sony as the lead console maker...

The article I saw said the console cost up to $400 to build at one point in time so thats possible.

Ok, we can end the backward-compatible debate for the top-selling xbox games on the Xbox360

linky

LOS ANGELES (Reuters) - Microsoft Corp. said on Monday its new Xbox 360 will run video games developed for the earlier generation of its gaming machine, an enticement to get fans who have already spent hundreds of dollars on older Xbox games to purchase new hardware
...
Although the Xbox 360 will be backward-compatible, Bach said that it won't necessarily run all of the older Xbox titles but instead, run the "top-selling" games.

The deal with Square Enix, developer of the popular "Final Fantasy" series, is a big win for Microsoft, which struggled to get Japan's leading game developers to make games for the first Xbox console.

Square Enix President Yoichi Wada said that the company will publish "Final Fantasy XI" for Xbox 360 and also develop other games for Microsoft's newest game machine.

Looks like Microsoft solves the problem of not having a Final Fantasy product for the Xbox360.

ggs wrote: Looks like Microsoft solves the problem of not having a Final Fantasy product for the Xbox360.

'We're gonna give you the game we gave the PC's. Now, go away while we finish making games for the Rev and the PS3.'

I'm guessing Microsoft's "top-selling games only" comment means that they'll only test their emulation layer with and tweak for popular games (Halo, Halo 2) and leave the rest to try their luck. Unless, for some weird reason, nVidia licensed them the technology to emulate what needs to be emulated with the condition that they only apply the technology to specific games. But I can't imagine why they'd do that.

My guess is that they're just recompiling the code on the top selling games like Halo 2 and either making them downloadable or selling them in bundles.