Xbox 360 doesn’t costs $715 to manufacture but . . .

On the Internet, rumors don’t need legitimate sources to be repeated over and over. The rumor about the Xbox costing $715 to manufacture was mentioned on waxy, joystiq, and over 20 other blogs.

I traced it back to this source who says:

A high ranking friend at IBM, one that worked on the Xbox 360 chip design, tipped us regarding the real expenses involved in manufacturing the Xbox 360, and when we mentioned the $126 Microsoft loss, he said:

“$126? It costs Microsoft approximately $715 to make, the manufacturing costs are still too high, another reason why they’re producing relatively small quantities, Microsoft can take it though”

 

Are you kidding me? A supposed “high ranking friend at IBM” of Ala Shiban (whoever that is!) is a quotable authority for the true manufacturing cost of the Xbox 360?

I guess it just doesn’t matter. It’s juicy so it gets picked up. The blogosphere is on a crash course with yellow journalism. I’m not saying that’s a good thing or a bad thing, it’s just important to understand when you are writing for the Internet.

Microsoft tells their shareholders that they’ve lost a little over $4,000,000,000 on the Xbox so far and sell the Xbox 360 console at a $126 dollar loss per console. I’m inclined to believe Microsoft’s statements to shareholder (that they can be held liable for) over hearsay from Ala Shiban - how ’bout you?

However, the fact that Microsoft understands the importance of the “set-top box/ game console” market long term and is willing to invest is telling. You know they feel that search is as important as the console, this begs the questions:

What happens when M$’s index is aged like Google’s? What happens when Microsoft starts paying surfers? How long can Google compete with a company that is willing to loose more than $4 Billion per year on search?

Both comments and pings are currently closed.

4 Responses to “Xbox 360 doesn’t costs $715 to manufacture but . . .”