My Nephew wants a X Box 360?

Question

He wants this for Chrstmas, can anyone tell me why they are soooo expensive??

Answer 1

Hello...

Three things help determine the price of a product.

1. Production cost

2. Profit margin

3. Demand

1. Production Cost

The Xbox 360 (and other Next Gen consoles) have processing power well beyond previous generations. Microsoft has NEVER made money on the console be it Xbox or Xbox 360. It is sold as a loss leader to get people into the market that Microsoft can then sell Xbox Live and Games too. That being said Xbox as a family still has not turned a profit for Microsoft. As recently as November 2005 there were estimates that the manufacturing cost of an XBOX was in the range of $525 to $750 USD per unit.

http://www.businessweek.com/technology/content/nov2005/tc20051122_410710.htm


2. Profit Margin

In this case there is none. It is more of a question of how long Microsoft can continue to take losses in order to establish themselves and make money long term on Live and Games.

3. Demand

In an open market such as the United States the price of an item will be as high as the market demand allows it to be. Microsoft will continue to balance growth in market share with loss of $ per unit with an eye to getting as much as they can from the consumer. If all Xbox 360's were collecting dust on the shelf there would be an incentive for the price to move down. With both Next Gen systems from Sony and Nintendo coming online in the next month you may see some downwards price pressure next year.

There is another article here: http://www.next-gen.biz/index.php?option=com_content&task=view&id=1497&Itemid=2
that claim the cost of production for an Xbox 360 will fall to $145 by Dec 2008. Therefore MS will start to make money on units sold and have much more room for lowering the costs.


Xbox 360 Info at Wiki: http://en.wikipedia.org/wiki/Xbox_360

Answer 2

The Xbox 360 isnt just a game system. You can stream music download videos display your digital pictures and listen to music from your mp3 player. It also is capable of resolution of 720p

Answer 3

Other than what the other person said, nothing but people are dumb enough to pay that much for one, I flipped when I had to pay 200 for an original xbox. never again will i buy a game system.