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Microsoft losing $126 per Xbox 360?

November 24, 2005 by David

It looks like with current part pricing, and whatnot, Microsoft might be losing money on this initial launch of the Xbox 360, and it is no small amount, as the cost of the materials might be as high as $470 US and add to that the other items packaged with the console, and Microsoft could be swallowing a $126 loss on each unit.

Here is Business Week with the details:

BREAKING IT DOWN. An up-close look at the components and other materials used in the high-end version of the Xbox 360, which contains a hard drive, found that the materials inside the unit cost Microsoft $470 before assembly. The console sells at retail for $399, meaning a loss of $71 per unit — and that is just the start.

Other items packaged with the console — including the power supply, cables, and controllers — add another $55 to Microsoft’s cost, pushing the loss per unit to $126. These estimates include assumptions that Microsoft is getting a discount on many components.

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