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Microsoft has never made a profit on the sale of Xbox consoles

Discussion in 'Microsoft Consoles' started by The Beast, May 7, 2021.

?

Would you have guessed this?

  1. Hell Yes - Classic razor and razor blade model

    17 vote(s)
    53.1%
  2. Yes - Only just

    4 vote(s)
    12.5%
  3. No - I would have thought they would eventually become profitable

    11 vote(s)
    34.4%
  4. Hell No - This is a complete surprise

    0 vote(s)
    0.0%
  1. The Beast

    The Beast Member

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    Microsoft confirms it's never turned a profit on sale of Xbox consoles • Eurogamer.net

    It makes 'sense', but it's still shocking to hear it confirmed so matter-of-fact.

    I would have thought the 360 was profitable, but I guess the red ring of death $1 Billion wiped out any margin they gained.

     
  2. elvis

    elvis OCAU's most famous and arrogant know-it-all

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  3. Agg

    Agg Lord of the Pings

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    Even petrol stations operate on this model. They make bugger-all on the fuel, but they hope you buy some chips and a drink while you're in there.
     
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  4. Copie

    Copie Member

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    They make plenty on the fuel. Current gate price is around 1.20, average sale price is 1.45.
     
  5. Agg

    Agg Lord of the Pings

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    So at 25c/L profit, if I put 40L into my tank they make $10, ignoring all the other infrastructure/operational costs to get that fuel to my tank. Meanwhile I buy an $8 sandwich, a $4 drink and a $3 chocky bar. :) Or the paper or a USB cable or some sunnies. I get your point, but I still think it's pretty self-evident that they get you in the door with the fuel but upsell a bunch of other stuff while you're in there. I guess it's different to the printer cartridge model in that you are not forced to buy the additional stuff.
     
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  6. Humane

    Humane Member

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    I thought it was pretty well known that the cost of producing an Xbox was (of any of the generations) was higher than the sale price.
     
  7. the_fuzz

    the_fuzz Member

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    That is terrible margins before costs
     
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  8. Copie

    Copie Member

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    It’s not bad. Operating costs for a typical servo halfway through it’s effective lifespan (around 20 years) is around 5c/l. So 15-20c/L profit isn’t terrible. Not to mention higher grades have a higher margin. A typical servo does 15,000-50,000L per day. Not bad money wise.
     
  9. the_fuzz

    the_fuzz Member

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    ACCC believe the profit of a petrol station is around $2.1c per litre including retail sales - that is terrible. If you are moving 50,000l a day, I assume that's a busy station, and taking home $1000 a day in net profit - that is a shit business - unless you own a chain of them
     
  10. clonex

    clonex Member

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    would you like a 1 dolla chocolate bar or 3 for $2:lol:


    Thank f for costco so no upselling there:leet:
     
  11. Copie

    Copie Member

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    ACCC is wrong. You can actually look up gate pricing.
    https://www.aip.com.au/pricing/terminal-gate-prices

    And if you look at fuel check for Sydney the average 91 price is around that 1.40 mark. Granted you need to add 2-3c for metro delivery.

    And that’s before any bulk or wholesale discount which brands self serving their own brand get, independents get discounts as well.

    50,000L is a kinda busy servo, but big servos will do 2-4x that amount per day, with really really big truck stop servo’s will do 500,000L a day without batting an eyelid. 9-10 truck loads a day. Think the M1 ampol twin servos, BP Beresfield, BP Marulan, Viva Sutton’s forest etc.

    So yeah they make really good money just on fuel, then they make even more from the shop front counter sales.
     
  12. HobartTas

    HobartTas Member

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    You forget to mention the most egregious case being sales of inkjet printer cartridges although I suspect the new continuous tank inkjets where you buy the ink in bottles has reduced the profit a bit.
     
  13. Butcher9_9

    Butcher9_9 Member

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    Pretty sure he said printers
     
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  14. Phido

    Phido Member

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    When I worked at a servo we would be between 0-10 cents on gate price. I filled up the other day in sydney for $1.25 as its discount week.
    But servos don't make money by selling petrol. You would barely pay for the operator costs. If you charge to high above gate, you get no customers, to low and you get no money. One drive off could blow your whole profit. $2 for 2L of milk also doesn't make money.

    Selling a coke bottle for $5.5 and a can for $4 does make money. They are glorified cornerstores.

    We used to turn over something like $30k a 8 hr shift (back in the late 90's). About $25k was costs (stock costs). So we probably made ~$5k profit. Out of which you paid your operators, your lease, your power etc, etc. So probably half that in actual profit, but two shifts a day.

    But we supported an eco system. We had two mechanics. We had a lawn mower guy who operated underneath on weekends. Tow truck guy also operated out the back, who towed things to the mechanics. We were one of the busiest 8 pump stations in Sydney, and could run with a single console operator.


    Xbox is same deal. You build an eco-system. The eco system has value, you lead the eco system, you can make money that way.
     
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  15. Lord Belial

    Lord Belial Member

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    No surprise to me. They're sold at a loss at launch and, as cost-reducing revisions are released, the price is aggressively dropped.

    I would like to see (and probably never will) their overall profit numbers over hardware, software licencing, sales of online products etc. Would be interested to see how it has evolved over each console life cycle too.
     
  16. elvis

    elvis OCAU's most famous and arrogant know-it-all

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    Definitely. Sony are in the same boat too.

    I'm fairly certain only Nintendo have made profits of consoles. And even then they've had a few exceptions (N64 and GameCube both cost them a packet).
     
  17. hotsuma

    hotsuma Member

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    I just wonder how much of a loss?

    like i doubt its 50%, if they're selling it for 5% less than it costs to make and put into a store one game sale and they are back into proffit

    I feel like its unlikley its something like the 4th or 5th game they start making money
     
  18. power

    power Member

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    I also heard the sky is blue, no one believed me but then I pointed out trees are green and they had to agree.

    and tennis balls are also a colour.
     
  19. Jumpingmanjim

    Jumpingmanjim Member

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    It's the same as their vaccine microchips, they lose money putting them in your arm but they make it back when they have total control of your brain.
     
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  20. Insert Gibberish

    Insert Gibberish Member

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    If no console maker is making any money at all on their consoles, why continually charge huge amounts in selling them?

    Why not supply them FREE of charge, when purchasing into their Gaming Eco System?
     

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