Friday, June 16th 2017
Microsoft Won't be Profiting from the Xbox One X's $499 Price Point
The lid was taken from Microsoft's Project Scorpio console last weekend. Commercially named the Xbox One X, the new Xbox console will join the "Xbox family of devices" with much higher power envelope than any other console currently in the market, at 6 TFLOPs of computing power. At that rate, Microsoft says (and has demonstrated) that its new console will be able to power premium, true 4K experiences. However, some analysts say that the $499 price point will be too high for consumers, which usually look to purchase consoles in the $249, $349 price band.
That said, the question could be put to Microsoft whether or not the company could have decreased their new console's pricing even further, by taking a cut from the hardware selling profits. When asked whether Microsoft was making any profit at all from the Xbox One X's retail pricing, Phil Spencer answered with a pretty frontal "No". So Microsoft really isn't profiting from the sale of any Xbox One X console, which may look somewhat unbelievable considering its steep price point (relatively; we have to keep in mind this console Can actually power 4K experiences.) However, this is nothing new: in fact, most gaming consoles ever released barely made any amount of money on hardware sales at the moment of their introduction to market. Manufacturers such as Microsoft and Sony instead usually choose to subsidize console purchases by bringing their profit margin to zero (and sometimes even below zero, as in, the consoles cost more to manufacture than their selling point) so as to allow a greater number of customers to purchase the hardware. Software, and more recently DLC, is where the money is to be made in consoles.
Remember that the Xbox One X packs a highly-custom 8-core processor based of AMD's Jaguar microarchitecture at 2.3 GHz, as well as a custom, 6 TFLOPs graphics processor by AMD. This one is based on the company's Polaris architecture, but incorporates custom specifications as per Microsoft requirements, as well as incorporating some features that will only be available with AMD's upcoming Vega architecture. There are 12 GB of both graphics and system-wide GDDR5 memory, a pivotal point of AMD's HSA architecture, a 1TB hard drive, a 4K Blu-ray player, and support for Dolby Atmos.
There is a lot of tech and design prowess in this little box (which is smaller than the Xbox One S, which was itself 40% smaller than the original Xbox One), including a per-console power distribution and power consumption delivery thanks to what is being called the Hovis method, and the usage of vapor-chamber cooling technology to allow the console to occupy such a small footprint.
That said, the question could be put to Microsoft whether or not the company could have decreased their new console's pricing even further, by taking a cut from the hardware selling profits. When asked whether Microsoft was making any profit at all from the Xbox One X's retail pricing, Phil Spencer answered with a pretty frontal "No". So Microsoft really isn't profiting from the sale of any Xbox One X console, which may look somewhat unbelievable considering its steep price point (relatively; we have to keep in mind this console Can actually power 4K experiences.) However, this is nothing new: in fact, most gaming consoles ever released barely made any amount of money on hardware sales at the moment of their introduction to market. Manufacturers such as Microsoft and Sony instead usually choose to subsidize console purchases by bringing their profit margin to zero (and sometimes even below zero, as in, the consoles cost more to manufacture than their selling point) so as to allow a greater number of customers to purchase the hardware. Software, and more recently DLC, is where the money is to be made in consoles.
There is a lot of tech and design prowess in this little box (which is smaller than the Xbox One S, which was itself 40% smaller than the original Xbox One), including a per-console power distribution and power consumption delivery thanks to what is being called the Hovis method, and the usage of vapor-chamber cooling technology to allow the console to occupy such a small footprint.
36 Comments on Microsoft Won't be Profiting from the Xbox One X's $499 Price Point
I still think they should have launched it at $399 with big new exclusives as the XBOX Two. Just take the hit now instead of later.
Selling a "Current-gen Branded" console for $499 is suicide.
Console makers have not been making money of the consoles for forever now, its the games that bring in the cash...
Hell I think MS made a loss on every Xbox they ever made.
Only Nintendo was making profit on sold consoles up untill the WiiU.
It is extremely disingenuous for MS to try and look altruistic, when anyone with half a brain knows they are not a Non-profit NGO. They are going MAKE sure they get paid, somehow.
As to not making a profit on the XboneX or whatever the hell it's called, this isn't news and all consoles have this patch during the initial release but production costs will decrease and they will make a f**kton from exclusives and games/subscriptions/ peripherals and even the console very soon, so my heart isn't bleeding for MS and their £500 console
I'm personally surprised it is that cheap. I was expecting $600-650 at least.
Imho, they should (and eventually will) give the hardware for free, since you don't own it anyway after you pay for it.
I just know the general consumer won't see it like that...
Edit: And you do own the hardware - you could run over it with a tractor, if you wanted. You just can't reverse engineer it.
They are selling a "Current Gen" console for $500 4 years into a generation. It is complete suicide.
It's an impressive piece of kit for that money. There is no two-ways about it.
And before any jumps on me with an immature taunt implying I'm some sort of console fanboy - I build my own computers and game primarily on them, but this doesn't make me blind to decent hardware outside of the segment.
They would then profit from sales of games, licensing and online memberships.
In fact it's a real shame that MS, SONY and Nintendo cannot sue them or some thing for the shit.
Not as any of it matters to me as i will not pay the monthly fee's.