Where is the margin hidden?
In a well-informed article, scott corley explores the question of what microsoft is doing to make money on the x-box. Telepolis knows the answer.
At its core, scott corley’s argument runs as follows:
- Since then this can hardly have decreased by more than maybe $100
- The starting price of the x-box was $299, now it is sold for $199
- A "i-give-you-the-shave-you-buy-my-blades"-strategy doesn’t work, because the license per game is not more than $5-10 and you buy on average only about seven games during the life cycle of a console
- While sony and nintendo can produce much cheaper, the costs for microsoft remain high, because too many standard pc components (intel processor, nvidia graphics chip) are integrated
According to scott corley, the microsoft guys have simply miscalculated. But is this believable in a company whose management has the almost mediocre ability to make gold out of everything (really everything)??
I can offer you two explanations, a boring one and an exciting one. Those who are not enthusiastic about conspiracies should only read (!) read the following paragraph, then immediately stop reading and especially do not post to the rest of the article.
The boring declaration is the entry into a new market (i.E. H. Home entertainment) and possible synergies resulting from the internet capabilities of the x-box. Maybe all the kiddies who don’t know anything about computers will come forward ("crass ey – and inndernet iss concretely also thereby"), thanks to the x-box at msn, and when they later have a computer, they stay at msn. Or microsoft’s dedicated game servers, which are to be expanded to the tune of billions, will make up for all the x-box start-up losses thanks to monthly fees.
Now to the exciting part. The unique thing about the x-box is that it is based on standard pc hardware. More than once, pranksters posted that all you had to do was figure out what hardware modifications you could use to make the x-box a full-fledged pc and give microsoft a run for its money: if there was an appropriate conversion kit for, say, $50, then there was finally, finally the $250 pc, which was considered about as unrealistic as the one-liter car. And microsoft would make a loss on every x-box sold, without being allowed to collect the gaming dough for it.
But have not our pranksters forgotten something?? An even more absurd prankster could argue something like this: what good is the best pc without an operating system?? If people buy (for a good $200) their xp retail version (that’s this operating system with pretty well working logon requirement) to the x-box, then a monster donation takes the place of the game sherflein. No one profits more from cheap pc hardware than the software maker, but microsoft can’t put its own pc hardware on the market without taking a cheap shot at the crude oems. But what if microsoft launches only a harmless, super-cheap game console, which is then turned into a pc by wicked, wicked hackers?? So microsoft became a victim just like all the poor dvd drive manufacturers, who have to watch with tears in their eyes, how devilish crackers program firmware patches to unlock the drives regioncode? Now dvd drive would hardly be able to sell on the retail market if there was no region-free patch – but ware had the impudence to insinuate the manufacturers that they would secretly be happy about patches because of that?
Of course, this is also just a bottomless conspiracy theory – because if the reboot kit really existed, no one could force users to install windows. And all the deviants (the little penguins and devils and other cuddly monsters) cost the manufacturer really dearly. In this respect, the boring explanation is more likely to be correct – or microsoft has really miscalculated this time.