Microsoft loses $126 per XBox 360
November 23rd, 2005
Microsoft lost a lot of money on the XBox. About 4 billion by some estimates. That’s a lot of money. Even for Microsoft.
So did they learn their lesson this time around? Apparently not. According to an independent study done by businessweek.com on the XBox 360, each unit sold is losing Microsoft $126.
They plan on selling 2 million units this year. That’s over a 200 million dollar loss. Chump change I guess.
But come on, first and foremost, Microsoft is a business. A very profitable business. So what’s their financial plan behind the black hole of cash?
A Microsoft spokeswoman said that the company’s plan calls for a “gross margin neutral” strategy through 2006, meaning that between the sales of consoles, game software, and accessories, it expects to essentially break even. Profits should follow in 2007.
Last round of consoles the only company that made money was Nintendo. The guy in third place. We’ll just have to see who’s profitable this round.
Entry Filed under: Gaming
5 Comments Add your own
1. Mark | November 23rd, 2005 at 12:44 pm
That’s the whole plan! After losing a lot of $ in their first year of the release of the PS2, Sony made tons of $ in like a year or 2 after, and now dominate the market - which is the ultimate goal to gain more sales and beat your competitors.
PS3 for example will also loose about $100 for every console sold if their price is set to about $400.
2. Eric | November 28th, 2005 at 8:01 am
No one’s arguing their plan :) I’m just reporting how much they’re losing per console. And $126 is by far the biggest loss on a per console, so we’ll have to see if it pans out this time.
Last gamble cost Microsoft 4 billion.
Granted Sony is finally profitable on PlayStation 2’s. However, Microsoft was 4 billion off from being breakeven. 4 billion.
3. Anonymous | December 20th, 2005 at 12:23 pm
So, Microsoft will make mega millions through its gamess. http://thegratisguide.blogspot.com
4. BlytheRubbings | May 30th, 2006 at 4:17 pm
While no fan of MSFT by any means, Sony has displayed some very wicked behaviour in recent years, so I am actualy routing for M$ to come out on top for this one. It’s also nice to see the US
playing a huge role in it’s own home market and even coming out on top, which hadn’t been seen seen the early 1980’s.
5. BlytheRubbings | May 30th, 2006 at 4:18 pm
console market that is
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