Xbox 360 As Loss Leader?

Tom Keating : VoIP & Gadgets Blog
Tom Keating
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Xbox 360 As Loss Leader?

Hard to believe that Microsoft is selling its new Xbox 360 as a loss leader? 

Yes, that's right.  According to a report published on the NewsFactor Network(, the total cost of the Xbox 360 that retails for $399 is $552.27; in other words, the cost of parts and manufacturing  means that Microsoft loses more than $150 on each box if sells (and this figure is even higher if we factor in the wholesale price that retailers actually pay for each unit).

Reminds me of the old joke about the clothing store that loses money on every suit it sells.  How do they stay in business? Volume.  (Rim shot special effect, please.)

Really, though, as volume increases, manufacturing costs decrease so there are profits on the horizon.  Plus, Microsoft receives royalties from game publishers to soften the impact.  Plus, they do have a sizable cash horde ...

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