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.
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36 Comments on Microsoft Won't be Profiting from the Xbox One X's $499 Price Point

#26
Camm
cdawallRx580 performance. From the Polaris chip in it.
But has more GCN units than a 580.
Posted on Reply
#27
jabbadap
CammBut has more GCN units than a 580.
While true Tflops are quite the same as RX 580 so if it would be graphics card on PC it could not touch gtx1070. But being console games can be optimized better, which matter the most.
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#28
cdawall
where the hell are my stars
CammBut has more GCN units than a 580.
It is underclocked when compared performance will be similar to the 580.
Posted on Reply
#30
Prince Valiant
ValantarOn the other hand, R&D costs are probably distributed evenly over estimated production volumes for the first 2-3 years - and is by far the biggest single expense per chip, considering the hundreds of millions if not billions of dollars chip development costs. In other words, it'll be a while until production costs drop to the point you're describing.
Is there any documentation showing that Microsoft (and/or Sony) are footing the bill for AMD's R&D costs?
Posted on Reply
#31
bug
Prince ValiantIs there any documentation showing that Microsoft (and/or Sony) are footing the bill for AMD's R&D costs?
Yes. Because there's absolutely no R&D to speak of in a console, besides the GPU. :rolleyes:
Posted on Reply
#32
Prince Valiant
bugYes. Because there's absolutely no R&D to speak of in a console, besides the GPU. :rolleyes:
It's not like there's an AMD CPU in there too, right ( :rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes::rolleyes:)? I'm only curious as to the sources for these claims.
Posted on Reply
#33
ADHDGAMING
They never profit on Xbox brand anyway
Posted on Reply
#34
ADHDGAMING
NTM2003They said it will even look better on a 1080p tv my Xbox one s looks grate but is the Xbox one x be even better
This is due to them using AA and Virtual resolution Blowing the image up to UHD then shrinking it to your screens demensions which in affect makes your TV a UHD TV. It is not as crisp as a real 4K TV but it will help reduce some jaggies and will overall look better than standard Xbox One 1080p.
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#35
Valantar
Prince ValiantIs there any documentation showing that Microsoft (and/or Sony) are footing the bill for AMD's R&D costs?
Considering that the chips are "semi-custom", it would be utterly baffling if R&D wasn't a part of the price customers pay for the chips. Or do you expect AMD to just swallow that cost and sell the chips at a fixed dollar price, regardless of the work? The only R&D costs AMD have for these chips come from following the wishes of the customer in designing the made-to-order semi-custom SoCs. As such, the customer pays for R&D. Simple logic.
Posted on Reply
#36
Prince Valiant
ValantarConsidering that the chips are "semi-custom", it would be utterly baffling if R&D wasn't a part of the price customers pay for the chips. Or do you expect AMD to just swallow that cost and sell the chips at a fixed dollar price, regardless of the work? The only R&D costs AMD have for these chips come from following the wishes of the customer in designing the made-to-order semi-custom SoCs. As such, the customer pays for R&D. Simple logic.
I don't know any specifics for these contracts and that's why I asked. Such is the purpose of asking a question.
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