Expected price of the Xbox, Microsoft to lose money

The Xbox will be approximately three times as powerful as the PlayStation 2 yet it will cost exactly the same. The most anticipated console of the year for many people undoubtedly is Microsoft’s machine. The New York Times recently reported that the expected price of the Xbox would be $300 when the console is released this autumn.

However, this rule is not written in stone. UK prices almost always match American prices in numerical terms. Because of the exchange rate, English products usually cost 1.5 times what they would in the states. So when the Xbox is released in Europe in 2002, it is likely that it will cost around £300.

Micrsoft’s J.Allard has gone on record as saying that each Xbox will cost $400 dollars to manufacture. This would mean a loss of $100 for each console sold. New technology is often subsidised to encourage a large hardware market base. The money lost is often recovered in software sales where the profit margin is larger. Sega lost $86 on each Dreamcast sale and Sony’s annual profits are also down. If this trend continues we can hopefully expect companies to be giving away free consoles in the future. Well maybe.