Microsoft takes a $100-$200 loss on all Xbox Series X|S sales

Sony in the last report said that they expect to reduce losses on hardware thanks to the new prices, so they are still losing money. A 100+$ loss on each hardware at 499 is totally believable
 
And there Ladies and Gentleman is why they are pushing GP till Kingdom comes...but GP isn't growing like MS predicted.
So with the say appr 18 mil consoles they sold they lost 18.000.000 x at least $100,-= $1.800.000.00 wow...
 
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I was fully expecting this, watching that machine aluminum part inside the XSX. Shit like that can't be cheap.

Although are they loosing money on S? 🤔
 
DenchDeckard said:
Again, we have absolutely no evidence that Sony has ever posted a profit from a ps5 console sale....

....but here we are. The masses have been convinced. GG Sony.
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Sony's CFO said in April of 2021 that the standard version was no longer selling at a loss and hoped that PS5 digital losses would be offset by peripheral and PS4 sales. "Not selling at a loss" could mean breaking even, so you could be right.
 
ReBurn said:
Either way, it doesn't look like Xbox is going to fail simply because their console business works like the console business has worked since the beginning of the console business.

I'd be surprised if PS5 consoles are still profitable considering changes in inflation and currency conversion rates. Especially when you look at the hit Sony took to operating income for the last few quarters. It's clear that Sony couldn't afford to not raise prices, otherwise they wouldn't have.
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Well if they saw that demand would plummet with a price increase they wouldn't have raised them in the first place. Sony has taken losses before I guess they determined that raising the price wouldn't really impact demand for them. I mean especially considering the competition made themselves more competitive by not increasing those prices.
 
Well, there goes the legitimacy of all the cries of amazing engineering for their consoles.

There's no valid argument for incredible hardware engineering when they're literally losing their shirt on every console sold. Any Tom, Dick, and Harry can slap a bunch of off-the-shelf components together in a $700 box and sell it for $500.

Great engineering means smart design choices that maximize performance while minimizing cost.

A $200 loss per box (also on the XSS?!?!) is staggering; especially when we're almost 3 years post-launch.
 
MasterCornholio said:
Well if they saw that demand would plummet with a price increase they wouldn't have raised them in the first place. Sony has taken losses before I guess they determined that raising the price wouldn't really impact demand for them. I mean especially considering the competition made themselves more competitive by not increasing those prices.
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A lot of people were comfortable paying scalper prices so sure, demand didn't plummet. But "plummet" is hyperbole. It's not like demand simply alternates between soaring and plummeting like the journos love to say. But it's not outside the realm of possibility that in concert with inflation and rising energy costs that some people can no longer afford a PlayStation after a 10% price hike in their region. Of course demand was affected, just probably not enough to prevent them from raising prices.
 
tmlDan said:
Isn't cloud juice just rain?

Nicolas Cage Wink GIF
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It makes plants grow.
 
SlimySnake said:
The 20 tflops 6800xt was just $550 last week. I posted a link in the PC thread.

The 13 tflops 6700xt was down to $350 on Sunday. The 10.7 tflops 6600xt was around $250 a couple of weeks ago.

The PCIE Gen 4 SSDs which launched for $250-300 last year have crashed to around a $100 this year. Hell, i picked one up for $150 earlier this year and that model is down to $100 already. I purchased a bunch of PC parts last year around August and they were expensive. They are all half off. Especially RAM and CPUs.

I really dont know what to say here. Consoles dont cost that much to make. MS isnt even using expensive SSDs like Sony is. $50 loss I can understand if you include distribution and shipment costs which have gone up but also come back down since the pandemic ended. Dont fall for these misleading statements. This man was just saying how gamepass was the future a few months ago and now, he's saying he maxed out the console userbase? What? Nothing about that interview makes sense. Just ask yourself, why would he still have a job if he was losing $200 per console (worse than the PS3 at this point in the gen), and was no longer able to sell gamepass to his console users?
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Mining bubble has burst. Also the demand for PC's is massively down. Even MS have stated as such for Windows OS. If there is no demand then prices come down to get rid of old stock. PC component demand is down.
Obviously Phil is probably exaggerating the cost to some degree. But it can be checked and he'd look stupid if he was way way over inflating the cost.
 
TheThreadsThatBindUs said:
Well, there goes the legitimacy of all the cries of amazing engineering for their consoles.

There's no valid argument for incredible hardware engineering when they're literally losing their shirt on every console sold. Any Tom, Dick, and Harry can slap a bunch of off-the-shelf components together in a $700 box and sell it for $500.

Great engineering means smart design choices that maximize performance while minimizing cost.

A $200 loss per box (also on the XSS?!?!) is staggering; especially when we're almost 3 years post-launch.
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It's $100 on Series S and $200 on X
 
John Wick said:
It's $100 on Series S and $200 on X
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Ok, thanks... that's still staggeringly bad.

The XSS is supposed to be a cheap console sold at a profit to offset the losses on XSX. If they're also losing on XSS then it defeats the whole point of that console even existing in the first place.

This just makes XSS look even more like a huge mistake. Devs hate it and now we hear that MS is even not making any profit on it.
 
John Wick said:
Also don't forget energy and fuel costs are through the roof. They are used in everything including transport and manufacturing. Also with the Xbox APU for Series X will be expensive too.
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Yep, commodities prices (which includes energy) are often the drivers of inflation. Until we see those cooling off there is no chance anything will start changing.

SmokedMeat said:
Yeah, I guess I had the blinders on as to how it used to be.
Maybe this is why we haven't seen a Switch 2 yet. Nintendo doesn't like to lose money on their consoles.
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I suspect so as well myself. Ever since the Wii Nintendo have opted to make sure they maintain positive margins on consoles sold.

SlimySnake said:
And yet, GPU prices have crashed. SSDs prices have crashed. RAM too. Why are consoles different?

Dont believe these liars. They both have their own agendas. You dont go from making profit in June of 2021 to losing money so much you have to raise price by $50. And for MS to be losing $200 two years after launch would be a bigger fuck up than Sony losing $200 on PS3s at launch. A console that broke even by year 2. So either Microsoft has created an even bigger fuck up than the PS3 or someone isnt being completely honest. Im gonna go with the latter because these consoles are using parts the PC industry uses. No fancy Cell like processors or expensive $250 blurays. Their APUs are made using the same 7nm tech AMD uses. MS's SSD is literally an off the shelve part. Same thing with their RAM.

Xbox One's BOM was $471. And that was with the kinect. Without the kinect, they were able to sell it for $400 and break even. For them to say that the Xbox Series X's BOM is $700 is nonsense.
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The prices of new GPU's have not crashed, in fact they have increased. The GPU's that have crashed in price are old models of which there is currently an oversupply of due to the crypto crash - as in those were already manufactured (used cards or withheld inventories in the case of "new" cards).

What AMD manage to do in terms of pricing for their new cards in a couple of days will be interesting.

Also you can't only factor in the chip costs.
 
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I'm not a fan of the loss-based hardware sales strategy. It basically locks in an advantage for the companies with the deepest ability to waste capital because they're not specifically gaming companies and have other giant sources of revenue (Microsoft as general PC software & tech company, Sony as media giant, etc). I'd much rather see all the behemoths carved up and forced to have their gaming divisions stand alone in the market against competitors.
 
How much of a loss is Sony taking? $300 right because they had to increase prices in some markets. I'm pretty sure they weren't turning a profit on each unit and increasing the price at the same time, right?
 
TheThreadsThatBindUs said:
Ok, thanks... that's still staggeringly bad.

The XSS is supposed to be a cheap console sold at a profit to offset the losses on XSX. If they're also losing on XSS then it defeats the whole point of that console even existing in the first place.

This just makes XSS look even more like a huge mistake. Devs hate it and now we hear that MS is even not making any profit on it.
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And thats why im not buying it. At least the XSX is using a massive 360 mm2 chip. they are using some 560 GBps chips mixed in with 360 GBps. XSS maxes out at 226 GBps and only has 10 GB of it. The SSD is smaller. The GPU is only 20 CUs and runs at such a low clockspeed that it only consumes 80 Watts. No need for fancy cooling that the 220 watts big boys need.

So just what they hell are they losing $100 on?

Thats why i refuse to believe this. I could understand $50 loss after retailer cut and high shipping costs during the pandemic, but two years later and AFTER the pandemic? If true then he should be fired along with the entire engineering team at Xbox. But it simply cannot be true.
 
TheThreadsThatBindUs said:
Well, there goes the legitimacy of all the cries of amazing engineering for their consoles.

There's no valid argument for incredible hardware engineering when they're literally losing their shirt on every console sold. Any Tom, Dick, and Harry can slap a bunch of off-the-shelf components together in a $700 box and sell it for $500.

Great engineering means smart design choices that maximize performance while minimizing cost.

A $200 loss per box (also on the XSS?!?!) is staggering; especially when we're almost 3 years post-launch.
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The XSX is faster, quieter, has a larger SSD, runs cooler, has virtually no reports of coil whine, is smaller, and is cheaper in most territories it is sold in.

A few reasons why it looses money compared to the PS5 instead of "hurr durr bad engineering ".
 
SlimySnake said:
And thats why im not buying it. At least the XSX is using a massive 360 mm2 chip. they are using some 560 GBps chips mixed in with 360 GBps. XSS maxes out at 226 GBps and only has 10 GB of it. The SSD is smaller. The GPU is only 20 CUs and runs at such a low clockspeed that it only consumes 80 Watts. No need for fancy cooling that the 220 watts big boys need.

So just what they hell are they losing $100 on?

Thats why i refuse to believe this. I could understand $50 loss after retailer cut and high shipping costs during the pandemic, but two years later and AFTER the pandemic? If true then he should be fired along with the entire engineering team at Xbox. But it simply cannot be true.
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Oh, I believe it. I think it has more to do with the instability in the semi-conductors supply chain and the potential lack of negotiating power MS has due to the low production volumes ordered for their consoles.

We know that Sony buys significantly more wafers from AMD than MS, and this combined with yields will have a big impact on the overall unit cost of the SoC.

I also think Sony was probably also losing quite a bit, hence why they increased the PS5 price. But now they've moved to the 6nm node, which would certainly help them to shave down the cost on their main SoC.

MS desperately needs to die-shrink its console APUs.

Zathalus said:
The XSX is faster, quieter, has a larger SSD, runs cooler, has virtually no reports of coil whine, is smaller, and is cheaper in most territories it is sold in.

A few reasons why it looses money compared to the PS5 instead of "hurr durr bad engineering ".
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Again, all of that means nothing if it's costing them $700 to make.

Once again, great engineering is defined by smart choices that maximize performance while minimizing cost. You can have the fastest quietest console on the market, but if you're losing hundreds on each box, you didn't do a good job engineering it. Full stop.
 
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TheThreadsThatBindUs said:
Well, there goes the legitimacy of all the cries of amazing engineering for their consoles.

There's no valid argument for incredible hardware engineering when they're literally losing their shirt on every console sold. Any Tom, Dick, and Harry can slap a bunch of off-the-shelf components together in a $700 box and sell it for $500.

Great engineering means smart design choices that maximize performance while minimizing cost.

A $200 loss per box (also on the XSS?!?!) is staggering; especially when we're almost 3 years post-launch.
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I mean literally nothing you typed here makes any sense

Incredible hardware engineering as you call it isn't cheap and to stuff what they did in the box they with the amount of noise it makes is really impressive.

And almost 3 years post launch?

Are we not just now approaching 2 years launch?

You know what never mind carry on with your mission
 
Well I was surprised that they didn't increase the price earlier in the year like Sony. I work in electronics manufacturing, all costs are up, component supply is slowly improving though.
 
TheThreadsThatBindUs said:
Once again, great engineering is defined by smart choices that maximize performance while minimizing cost. You can have the fastest quietest console on the market, but if you're losing hundreds on each box, you didn't do a good job engineering it. Full stop.
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Absolutely nonsense. If a console has several engineering advantages and is sold at a cheaper price (which you neglected to mention) that just means the manufacturer had different goals in mind when designing the console. Not that the console itself is badly designed. If the XSX had a worse cooling system, a smaller SSD, a smaller APU, less focus on preventing coil whine and was priced up to 20% more expensive in some markets it would obviously be cheaper to manufacture and make more money per unit sold.

It's an even further reach when you consider the fact that you have zero knowledge in the assembly costs of either console, where the parts are supplied from, how economies of scale impact the price or even what factors Sony or Microsoft are considering when it comes to if they think a console is profitable or not.

You might want to also realize that Microsoft might be deliberately making sure the consoles are not sold for profit, as that is one of the key arguments they use when it comes to the "walled garden" debate that is currently ongoing when it comes to computing devices.
 
Infinite m$ money. They don't need to make money on hardware.
But then, they will say they are the weaker gen for cma.
But sony does not have infinite money backing to eat so much money on each console
 
SlimySnake said:
And yet, GPU prices have crashed. SSDs prices have crashed. RAM too. Why are consoles different?

Dont believe these liars. They both have their own agendas. You dont go from making profit in June of 2021 to losing money so much you have to raise price by $50. And for MS to be losing $200 two years after launch would be a bigger fuck up than Sony losing $200 on PS3s at launch. A console that broke even by year 2. So either Microsoft has created an even bigger fuck up than the PS3 or someone isnt being completely honest. Im gonna go with the latter because these consoles are using parts the PC industry uses. No fancy Cell like processors or expensive $250 blurays. Their APUs are made using the same 7nm tech AMD uses. MS's SSD is literally an off the shelve part. Same thing with their RAM.

Xbox One's BOM was $471. And that was with the kinect. Without the kinect, they were able to sell it for $400 and break even. For them to say that the Xbox Series X's BOM is $700 is nonsense.
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It's all those discounted $1 gp subscriptions….
Super Freak Flirting GIF by Rick James
 
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ReBurn said:
Sony's CFO said in April of 2021 that the standard version was no longer selling at a loss and hoped that PS5 digital losses would be offset by peripheral and PS4 sales. "Not selling at a loss" could mean breaking even, so you could be right.
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Well that slide from Sony which is in writing clearly says its expected to break even in June 2021. If anyone has any receipts to prove anything different, then Im more than happy to accept that but I can promise everyone that even shipping doubled in December 2021. It's improved now but until proven otherwise I honestly believe the ps5 is selling at a loss.
 
HeisenbergFX4 said:
I mean literally nothing you typed here makes any sense

Incredible hardware engineering as you call it isn't cheap and to stuff what they did in the box they with the amount of noise it makes is really impressive.

And almost 3 years post launch?

Are we not just now approaching 2 years launch?

You know what never mind carry on with your mission
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What part of the following doesn't make sense:

Great engineering means smart design choices that maximize performance while minimizing cost.
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To me and most others here, it's pretty clear. And ok yeah, I got the 3/2 year thing wrong. It hardly makes a difference to the fact that MS is losing $200 on every XSX. There's nothing impressive about that.
 
Zathalus said:
Absolutely nonsense.
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Zathalus said:
You might want to also realize that Microsoft might be deliberately making sure the consoles are not sold for profit, as that is one of the key arguments they use when it comes to the "walled garden" debate that is currently ongoing when it comes to computing devices.
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Calls a perfectly logical claim about sound engineering design "absolute nonsense" and then proceeds to use an argument that is essentially absolute nonsense.

What can I say really?
 
Zathalus said:
Absolutely nonsense. If a console has several engineering advantages and is sold at a cheaper price (which you neglected to mention) that just means the manufacturer had different goals in mind when designing the console. Not that the console itself is badly designed. If the XSX had a worse cooling system, a smaller SSD, a smaller APU, less focus on preventing coil whine and was priced up to 20% more expensive in some markets it would obviously be cheaper to manufacture and make more money per unit sold.

It's an even further reach when you consider the fact that you have zero knowledge in the assembly costs of either console, where the parts are supplied from, how economies of scale impact the price or even what factors Sony or Microsoft are considering when it comes to if they think a console is profitable or not.

You might want to also realize that Microsoft might be deliberately making sure the consoles are not sold for profit, as that is one of the key arguments they use when it comes to the "walled garden" debate that is currently ongoing when it comes to computing devices.
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None of those things matter when their $200 loss console performs roughly the same as the other console that has been profitable for a year and a half.

No one here has insider knowledge of how much parts cost. What we know is that one console is profitable while the other isnt. What we know is that the biggest disaster in the last 30 years was the PS3 which sold for a $200 loss thanks to Sony's insistence on shoving $250 bluray discs down everyone's throat. If what Phil is saying is true then this would be a fuck up of PS3 proportions, the only difference is that Sony won the bluray war thanks to taking a $200 loss while Xbox is still in third place with no secondary market win it can call its own.

Sony was crucified for that and rightfully so, but here we are, making excuses for Microsoft? Why?
 
TheThreadsThatBindUs said:
Ok, thanks... that's still staggeringly bad.

The XSS is supposed to be a cheap console sold at a profit to offset the losses on XSX. If they're also losing on XSS then it defeats the whole point of that console even existing in the first place.

This just makes XSS look even more like a huge mistake. Devs hate it and now we hear that MS is even not making any profit on it.
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When is the last time a launch box made a profit?
 
Why everyone believes what multi-national company CEO's say anyway?. They will manipulate information in front of european courts and the US congress lol... and even lie to their own stockholders, like the Nvidia CEO was doing last year.
 
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DeepEnigma said:
Agreed... but...

"It's only okay when we do it." - adamsapple
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To be fair, I've never sided against any company eating costs for a consumer. But if we're talking about the PS5, reporetedly it was already selling at a profit as of June 2021, so that increasing in price is a completely different thing.

Granted we can't say for sure whether PS5 (or even Switch) is *still* selling at a profit right now, with the way everything is fucked up.

My fucking car insurance went up $200 in 2022 compared to 2021 and I haven't even had a single fucking ticket or accident. It's pure inflation.
 
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