According to the report from research firm IHS, Microsoft’s Xbox One costs $471 to build. Microsoft is now selling the console for $499, which leaves very less margin up front when the console is sold. Microsoft expects to earn more money via selling games and services in the future. In comparison, Sony’s PS4 costs $381 to build and it is being sold for $399 in the market. Microsoft’s inclusion of Kinect sensor which costs $75 is the main reason for Xbox One to cost more than Sony PS4.
Rick Sherlund, an analyst with Nomura Securities, has estimated that Microsoft is likely to lose as much as $1 billion this year on the Xbox One, after accounting for research and development plus sales and marketing costs.
Typically with videogame systems such as this, the cost of the components does come down, and newer and less-costly components get swapped in over the product’s lifetime. This will give Microsoft the chance to improve the Xbox One and, if history is any judge, to trim the price incrementally over the next several years.
Do you think Microsoft is going in a right way to capture the living rooms of millions of people?