Xbox 360 – Not a winner for Microsoft

Microsoft officials may have been maintaining a brave front that the retail price of its new Xbox 360 game console is covering the production costs and that it is not bleeding they company, but findings of two different market researchers dent a hole in this claim.

On Thursday, researcher Portelligent presented an estimate of the production cost and retail price of the product and maintained that while the production cost of Xbox 360 stands at around $310, its being sold at US$299.99. This certainly is not a profitable proposition for the company. The researcher maintained that though the company has tried its best to bring down the production cost, it still is higher than the price at which it is being offered to game console enthusiasts.

Another research findings presented by iSuppli Corp. deals with Xbox 360 premium edition, where Microsoft is projected to be incurring greater losses. The product is being sold at $399.99 but according to iSuppli, its production cost is in the range of $525.

Owing to a large differential between the production cost and retail price, some of the component providers are also likely to take a hit. But Microsoft is not conceding the ground and is hopeful that the production cost of all editions of Xbox will come down with an increase in the production volume. Analysts will keenly watch whether it really happens or not.


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