Microsoft Says It's Never Made Money Selling an Xbox Console

Microsoft, like Sony, has focused on high-end video game consoles with an emphasis on graphics technology. As a result, these consoles tend to be very expensive to produce, and it typically takes years before production costs come down and they start turning a profit per console sold. But apparently in the case of Xbox, there has never been a point where Microsoft's made money.

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Wow. I’m genuinely shocked. I can’t believe that five years after the launch of the 360 the S was selling at a loss at $300. That’s only $50 less than the launch price and a full five years later.

Then again I don’t know how corporate math works here. Would the cost of fixing all those red rings factor in if they look at total cost of the console over lifetime or would they still be looking at pure cost per unit/retail price?

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I interpret that to mean that they never made a profit per box sold without bringing the red ring business into it.

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That’s my interpretation too, and it just seems bizarre to me. How did the cost to manufacture not drop enough? How is it even possible that 8 years later the 360 e still cost them more than $200 to make? It only had 4gig of storage in 2013.

Custom PowerPC chip? That’s the only reason I can think of.

I like the idea of Nintendo being an outlier in a field of 3 competitors.


I bet R&D factors hugely into this. They have huge teams of in-house Product Designers/Managers, they’re making a software front-end in addition to a piece of hardware and both those need to be aligned. They’re also integrating these things with services like Twitch and YouTube, which can mean months of dev time if they’re the ones building the integration.

I’m pretty sure they can figure out how to make a profit on the hardware itself, but that profit evaporates when you factor in how much MS has spent developing 3 out of 4 boondoggles. The OG Xbox took years to design and was awkwardly overpowered, the 360 Red-ringed and the Xbox One’s original incarnation was giant set-top box released into the era of smart TVs. No wonder their budgets blew out.


I’m still not sure what point Apple is trying to make.

An Xbox is not anywhere close to being equivalent to a phone. You arguably need a phone for everything and a phone is a lot of people’s only computer. An Xbox is arguably in nature a computer but almost no one is paying their bills or filling out job applications from their Xbox.


Apple wants to argue they should be treated like a console. Epic is arguing that they should be treated like a PC. That’s more or less the crux of the issue as best I can tell.

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