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[Klayzer]

Intresting. I think its in the console makers best interests to keep it that way for business reasons (Sub model, overpriced perephials, dlc, etc). Without claiming there's not money in hardware sales, they couldn't get away with what they charge for games, etc.

Except for Nintendo, they can literally charge whatever the hell they want.

 

[Zeroing]

i get what you mean. apple is selling iphones at a loss because they make the money back with the app store and their 30% cut.

oh wait a minute. the $1250 iphone max costed apple $450 to make

The $1,250 iPhone XS Max Costs Apple $450 To Make, Nearly A 200% Profit Margin

The teardown of Apple's 256 GB iPhone XS Max ($1,199) revealed that the actual cost of making the phone was just $443, including the price of all the phone's components as well as test and assembly costs, which is about $50 more than for last year's entry-level iPhone X (64 GB).

www.forbes.com

Dat Apple “tax” is going to used to save the environment oh no wait, it goes to offshores! Yep

that is the biggest issue in this lawsuit. Greed!

 

[Sakura]

This argument doesn't make any sense to me.
Who cares if Microsoft doesn't make a profit on the consoles sold? Or Sony? If they aren't making a profit, that's because they chose to set the price points where they did. What's to stop them from taking an approach like Nintendo or whomever else, and releasing a product at a price point they can make a profit on? Nothing. How did Sony make money on the PS2 or PS1, when there was no PS Store to sell games and in app purchases they took 30% off? Why does Microsoft need to charge 30% in order to make money off the Xbox? Why not 20%? What's to stop Apple saying, "OK well we will just sell our phones without a profit too so we can keep charging 30%"?
I don't understand what they are trying to prove with this argument.
I don't see a situation where this doesn't open up arguments against MS and Sony to open up their stores etc.

 

[NickFire]

I don't think the profit/loss from the product angle would ever hold up. Apple losing here will ultimately strike at any walled garden, IMO.

This is a real tough one for me. There is a stark difference in the initial business model. Apple sells for profit (I think anyway), and MS / Sony kind of pay the consumer to enter their park by selling below cost. But yeah, like you, I am not all that confident that a standard business practice (loss leaders) would be enough for a future court to differentiate the two if Epic wins and its upheld on appeal. This is dark grey water that I don't care for beyond thee treasure trove of information dumps we are all getting.

 

[DaGwaphics]

What's to stop Apple saying, "OK well we will just sell our phones without a profit too so we can keep charging 30%"?

Truth be told, they'd probably net more that way if they had to choose one way or the other.

 

[Magnific0giganticus]

News at 11... I've known this for years. Also, Game Pass bleeds money like crazy. The Xbox Division will never be in the black unless their big masterplan of turning Game Pass into a massive popular service (200 million + subscribers) become a reality in the next 10 years and keeps growing.

 

[massivekettle]

No, it is not wrong.

Why shouldn't I be allowed to install whatever software I want from anywhere I want on my personal computer, i.e. my mobile device? You're not making an argument. You're just staying the status quo. Yeah of course software makers benefit from the user base of a device. That's what makes making software attractive for it. It's the entire basis for Windows and Mac as well. There are large user bases for both, so writing software for both is attractive.

You think Apple and Microsoft should be getting huge cuts of ALL software written for those OSes too?

Let's use real logic and arguments here not just "Apple made it, Apple deserves to do whatever the hell it wants!"

Remember, MS got nailed for including a free web browser in their OS.

You seem to be confusing a few things here.

First, Apple doesn't have a monopoly in mobile whilst Microsoft in the 1990s did have a monopoly in personal computing software.
Second, Microsoft used said dominant position to basically run Netscape out of business (which it did) by pre-installing IE. This is why they got sued by antitrust bodies around the world. This is abuse of monopoly power.

Third, Apple's iOS is closed source because that's how Apple does things and sees a lot more benefits (both for the benefit of Apple's bottom line AND user experience) from a closed source structure (i.e., security, quality control, performance, monetisation).

 

[Sakura]

i get what you mean. apple is selling iphones at a loss because they make the money back with the app store and their 30% cut.

oh wait a minute. the $1250 iphone max costed apple $450 to make

The $1,250 iPhone XS Max Costs Apple $450 To Make, Nearly A 200% Profit Margin

The teardown of Apple's 256 GB iPhone XS Max ($1,199) revealed that the actual cost of making the phone was just $443, including the price of all the phone's components as well as test and assembly costs, which is about $50 more than for last year's entry-level iPhone X (64 GB).

www.forbes.com

Might as well talk about how physical games only cost like a couple bucks to manufacture and yet they charge us 60 bucks. But we wouldn't do that because that is dumb as all hell. You can't ignore the cost of R&D, marketing, having to pay all their employees, etc. Obviously they are making a profit, but it's not a straight 800 bucks off each phone.

 

[Tripolygon]

This argument doesn't make any sense to me.
Who cares if Microsoft doesn't make a profit on the consoles sold? Or Sony? If they aren't making a profit, that's because they chose to set the price points where they did. What's to stop them from taking an approach like Nintendo or whomever else, and releasing a product at a price point they can make a profit on? Nothing. How did Sony make money on the PS2 or PS1, when there was no PS Store to sell games and in app purchases they took 30% off? Why does Microsoft need to charge 30% in order to make money off the Xbox? Why not 20%? What's to stop Apple saying, "OK well we will just sell our phones without a profit too so we can keep charging 30%"?
I don't understand what they are trying to prove with this argument.
I don't see a situation where this doesn't open up arguments against MS and Sony to open up their stores etc.

It is simple. Different sale strategy. Consoles for the longest time have operated on the razor and blades model. Give the razor away for free or reduced cost and make profit on the blade. Lots of products operate that way. Vacuum cleaners with bags, printers for cheap but expensive inks. See how people responded to the idea of consoles being priced at $600 and how people hate games being priced at $70.

Apple makes a huge profit with every iPhone sold. Allowing an “App Store” on iOS will not cut into their profit. They just don’t want the competition and if I owned iOS I wouldn’t either but as a consumer I’m fully in support of them allowing other app stores just like you can sideload another AppStore on Android. Phones have become general computing devices just like computers.

 

[Derktron]

Dang. Without Microsoft backing Xbox these guys could have left this biz long time ago.

And to think at one point during 2013 and 2014 rumors was that Microsoft wanted to sell Xbox.

 

[The artful mincer]

I was under the impression that at the start of the generation consoles don't turn a profit on a per unit basis but as the generation roles on they make a profit as they cut costs etc.

So does this mean that Microsoft have never made profit on a per unit basis?

 

[DaGwaphics]

I was under the impression that at the start of the generation consoles don't turn a profit on a per unit basis but as the generation roles on they make a profit as they cut costs etc.

So does this mean that Microsoft have never made profit on a per unit basis?

Most of the time the savings in manufacturing just result in price reductions of the hardware. They stick with the razor and blades. The cheaper you can make the hardware the less resistance to purchase, allowing you to sell more razors and therefore, even more blades. MS especially heavily discounts as time goes on, while the 1S and 1X never officially received a price reduction finding them for $100 less than MSRP wasn't that hard. Sometimes even more.

 

[Sakura]

It is simple. Different sale strategy. Consoles for the longest time have operated on the razor and blades model. Give the razor away for free or reduced cost and make profit on the blade. Lots of products operate that way. Vacuum cleaners with bags, printers for cheap but expensive inks.
Apple makes a huge profit with every iPhone sold. Allowing an “App Store” on iOS will not cut into their profit. They just don’t want the competition and if I owned iOS I wouldn’t either but as a consumer I’m fully in support of them allowing other app stores just like you can sideload another AppStore on Android. Phones have become general computing devices just like computers.

No, I understand it is a sale strategy.
But the argument doesn't work, because a strategy is a choice. Microsoft isn't forced to sell the Xbox at a loss in order to make money. They just choose to do that because it is more profitable that way. If the judge said, "You can't sell devices at a profit and have a walled garden!" then Apple could just stop selling the phones at a profit, again, because it is more profitable to take a 30% cut off everything. Now, that would obviously be good for the consumer because the phones would be cheaper, but it wouldn't be what Epic wants.

 

[josephgamer]

PS4 & PS5: SONY ONCE AGAIN PROVES THAT MONEY COMES BEFORE GAMERS’ DEMANDS

Source

 

[ethomaz]

PS4 & PS5: SONY ONCE AGAIN PROVES THAT MONEY COMES BEFORE GAMERS’ DEMANDS

Source

That is the natural path of the business... you can only full fill gamers demands after have money.

 

[Tripolygon]

No, I understand it is a sale strategy.
But the argument doesn't work, because a strategy is a choice. Microsoft isn't forced to sell the Xbox at a loss in order to make money. They just choose to do that because it is more profitable that way. If the judge said, "You can't sell devices at a profit and have a walled garden!" then Apple could just stop selling the phones at a profit, again, because it is more profitable to take a 30% cut off everything. Now, that would obviously be good for the consumer because the phones would be cheaper, but it wouldn't be what Epic wants.

You keep failing to see it’s not a zero sum game. They can still sell their iPhone at profit, keep their 30% cut from the App Store and also allow streaming apps like Xcloud, PS Now, Stadia and EGS on iOS. It does not cut into their profit.

 

[Fbh]

Since the jump to digital I always assumed the strategy was to sell the hardware as cheap as possible and make money through software, services and a cut from third party sales.
With MS focusing on Gamepass it makes even more sense to try and make the hardware as accessible as possible

 

[kyliethicc]

I was under the impression that at the start of the generation consoles don't turn a profit on a per unit basis but as the generation roles on they make a profit as they cut costs etc.

So does this mean that Microsoft have never made profit on a per unit basis?

Yeah thats what they said. Never made a profit.

Where as, for example, Sony said the PS4 became profitable (per unit) in 2014. And they said PSVR was profitable from day 1 in 2016.

 

[DaGwaphics]

Yeah thats what they said. Never made a profit.

Where as, for example, Sony said the PS4 became profitable (per unit) in 2014. And they said PSVR was profitable from day 1 in 2016.

Looks like Sony shouldn't be allowed to collect their 30% cut after all, those greedy bastards.

 

[Sakura]

You keep failing to see it’s not a zero sum game. They can still sell their iPhone at profit, keep their 30% cut from the App Store and also allow streaming apps like Xcloud, PS Now, Stadia and EGS on iOS. It does not cut into their profit.

How could allowing competing stores on their platform not possibly eat into their profit? That is a 30% cut that they are no longer getting.

 

[kyliethicc]

Looks like Sony shouldn't be allowed to collect their 30% cut after all, those greedy bastards.

I honestly assume that Sony negotiates a lower price for some components due to higher expected lifetime sales and their focus as a hardware company. Sony's main money maker is PlayStation now.

Where as Microsoft has Windows and Azure for their money makers.

 

[DaGwaphics]

I honestly assume that Sony negotiates a lower price for some components due to higher expected lifetime sales and their focus as a hardware company. Sony's main money maker is PlayStation now.

Where as Microsoft has Windows and Azure for their money makers.

It was just a joke regarding the whole Epic vs. Apple thing. Through that lens, MS are the only good guys if both Sony and Nintendo turn a profit on hardware like Apple does.

 

[Kilau]

With the way Sony shoves a PS console into a box versus how MS lovingly packs their system in I’m not surprised they don’t make money. Hope they don’t start cutting the same corners.

 

[DeepEnigma]

PS4 & PS5: SONY ONCE AGAIN PROVES THAT MONEY COMES BEFORE GAMERS’ DEMANDS
Source

Imagine saying this as a Nintendo fansite.

 

[IntentionalPun]

With the way Sony shoves a PS console into a box versus how MS lovingly packs their system in I’m not surprised they don’t make money. Hope they don’t start cutting the same corners.

Spoiler: NSFW

 

[BootsLoader]

These console manufacturers most likely can't wait for the day when streaming becomes viable and they won't need to worry about making losses on hardware being sold to end users.

If this isn't the last generation then the next one almost certainly will be.

There will come a time when the only option to play new games on local hardware will be through PC gaming.

I hear this every gen.

 

[Magnific0giganticus]

I can see where they would lose money on hardware overall, but I can't believe they have never made profit on a single xbox machine......I mean an old xbox one must have at least had some razor thin margin later in its life.

Not enough to recoup the losses. And they also lost heavily on One X.

 

[Edgelord79]

The fact that Microsoft doesn't turn a profit from console hardware sales shouldn't be that much of a surprise to anyone especially when the margins are razor thin to begin with.

 

[SenjutsuSage]

He'll have to go through somebody first before he touches Xbox.

 

[Mr Moose]

Imagine saying this as a Nintendo fansite.

All that user does is posts links to that website.
Suspicious.

 

[James Sawyer Ford]

Xbox greatest strength has always been Microsoft's deep pockets and I think they're flexing that this generation more than any other. There's no way in hell they'd survive against Sony otherwise. I see this as a net positive at the end of the day. Nintendo has not directly competed with Sony since the Gamecube days. Despite all the fanboy bullshit, I'm glad Xbox is still around to keep Sony on their toes and vice versa. We can post stuff on forums about all the bullshit either company pulls, but without one of them, we'd have to swallow a whole lot more.

competition is good, but when you have pockets as big as MS from other divisions being profitable it’s not always in the consumer’s best long term interest to have that sort of disruptive power in a division losing money

I don’t think the Zenimax acquisition is good for gamers or the industry, for instance

 

[Lord Thunderbear]

Might as well talk about how physical games only cost like a couple bucks to manufacture and yet they charge us 60 bucks. But we wouldn't do that because that is dumb as all hell. You can't ignore the cost of R&D, marketing, having to pay all their employees, etc. Obviously they are making a profit, but it's not a straight 800 bucks off each phone.

Just like any other CPU and GPU manifacturer and OS developer. So should we expect each of them to ask for a cut of software sales running on their hardware/OS as well since the price of their own product isn't a straight profit either?

 

[Deaconstanjesusman]

Everyone complaining about iPhones and apples practices. ……. Go buy an android. Android has 80% of the market. It’s apples device and apples store. Don’t like the terms? Move to another platform.
A lot of us like the closed system. Now you have epic who want to have access to over a billion devices but do it for free.

 

[BattleScar]

Shots fired. MS, Sony, Nintendo, EGS etc all have closed systems.

I don't like Apple but they got a point... Open the gates! Lol

Difference is the scale. Apple's ecosystem absolutely dwarfs all of Sony, Microsoft and Nintendo's ecosystems. For every console sold, Apple likely sells 10+ iPhones at double the retail price.
They very likely make more profit off of hardware than the total profits of any of the three's gaming divisions (or perhaps more than all three combined). Apple doesn't need to charge so much money to developers who put their app on the App Store for their business to be profitable or successful.

Meanwhile Microsoft just admitted that they have never made a profit from hardware sales. The same is true of Sony (the PS3 nearly bankrupted their entire business). If they didn't charge developers to publish on their stores they likely wouldn't make much if any money at all.

Apple's lawyer has a point, but its not even close to being a checkmate, and from my perspective its quite easily countered.

I've not even gotten to the point of the difference in nature of smartphone/personal computing ecosystems vs. Consoles. The iPhone might not control the entire smartphone market, but they are undoubtedly one of its biggest players. And the iPhone is a gaming machine (much as puritanical gobshites hate to admit), a personal computing device, a personal communications device, a media consumption device, a map, a calculator and so on and so forth. Apple has within them the power to take any application they think is useful and make their own and tightly integrate it into their software. They won't outright ban competitors to maintain some semblance of an illusion of choice for their users. But only Apple can deeply and seamlessly integrate the features of that app directly into their phone, which means for most users its not really a choice at all. And on top of that they get to charge their "competitors" 30% of the money they make on their App just for it to exist on the platform in the first place.

They have billions of users, many of whom either have bought into the cult of Apple, or simply see them as the default choice in the smartphone space. So if they decide to do this, they've basically eliminated any chance for a competing software product from ever establishing itself and succeeding. Lord only knows how hard they're trying to bury Spotify, all the while raking in 30% of any revenues generated by the Spotify App on the App Store.

 

[CobraAB]

Apple sure as hell can’t say that about the iPhone or any product they have ever sold for that matter.

 

[DaGwaphics]

I think some people are being a little dramatic too. The MS dude never said that MS never turned a profit on Xbox, he said they never turned a profit on the hardware directly, meaning any profits were indirect. You can probably put the sickles away for the moment. LOL

 

[Magnific0giganticus]

Xbox's profit margin is slim not only when compared to other MS divisions but also other gaming companies.

Aside from Minecraft, MS doesn't have any "gaming profit margin". They recently reported $739 million (up 34% from the previous year) in REVENUE for a whole 3rd Quarter. That includes all the revenue from Xbox game sales, 1st and third party marketplace, Gold subs, Game Pass subs...not hard to do the math. They don't make money, they bleed money.

 

[DaGwaphics]

Aside from Minecraft, MS doesn't have any "profit margin". They recently reported $739 million (up 34% from the previous year) in REVENUE for a whole 3rd Quarter. That includes all the revenue from Xbox game sales, 1st and third party marketplace, Gold subs, Game Pass subs...not hard to do the math. They don't make money, they bleed money.

Where'd you see that at. The last quarter I saw had the gaming division at 3.5b and one before at 5b.

Despite Xbox shortages, Microsoft reports $3.6B in Q3 gaming revenue, 232% growth in hardware sales

As per the company’s fiscal third quarter earnings report, Microsoft’s Xbox division posted $3.6 billion in revenue, up 50% year-over-year. Microsoft also reported a 232% increase in overall gaming hardware… Read More

www.geekwire.com

MS doesn't report profits for specific divisions.

 

[IntentionalPun]

Aside from Minecraft, MS doesn't have any "profit margin". They recently reported $739 million (up 34% from the previous year) in REVENUE for a whole 3rd Quarter. That includes all the revenue from Xbox game sales, 1st and third party marketplace, Gold subs, Game Pass subs...not hard to do the math. They don't make money, they bleed money.

Ummm.. their revenue INCREASED BY 739 million.. which was a 34% increase.. their revenue was over 3 billion dude lol

 

[Bragr]

The reason why Nintendo doesn't chase high-end systems.

 

[Magnific0giganticus]

I stand corrected. Still, no profit.

 

[Magic Carpet]

iOS 12, iOS13
names instead of xbox 360, series X.
It's possible for a game to only be available on ios 12 and not 13.

 

[IntentionalPun]

Despite Xbox shortages, Microsoft reports $3.6B in Q3 gaming revenue, 232% growth in hardware sales

As per the company's fiscal third quarter earnings report, Microsoft's Xbox division posted $3.6 billion in revenue, up 50% year-over-year. Microsoft also

www.geekwire.com

Xbox content and services revenue also increased by 34%, or $739 million, in the March quarter, which Microsoft claims was “driven by strength from third-party titles, Xbox Game Pass subscriptions, and first-party titles.”

Read your own quote there dude.. then read it again.. and again, until you get it lol

 

[DeepEnigma]

I think some people are being a little dramatic too. The MS dude never said that MS never turned a profit on Xbox, he said they never turned a profit on the hardware directly, meaning any profits were indirect. You can probably put the sickles away for the moment. LOL

This.

 

[Dave_at_Home]

competition is good, but when you have pockets as big as MS from other divisions being profitable it’s not always in the consumer’s best long term interest to have that sort of disruptive power in a division losing money

I don’t think the Zenimax acquisition is good for gamers or the industry, for instance

I don't necessarily disagree with you here. The Zenimax purchase is a big deal. What's important here is how Sony responds. In order to fight back against that, do they start having first-party studios create Bethesda like games (but better)? This could work out in the end for Sony if some of their first-party studios start going toe-to-toe with them.

 

[Spacefish]

This argument doesn't make any sense to me.
Who cares if Microsoft doesn't make a profit on the consoles sold? Or Sony? If they aren't making a profit, that's because they chose to set the price points where they did. What's to stop them from taking an approach like Nintendo or whomever else, and releasing a product at a price point they can make a profit on? Nothing. How did Sony make money on the PS2 or PS1, when there was no PS Store to sell games and in app purchases they took 30% off? Why does Microsoft need to charge 30% in order to make money off the Xbox? Why not 20%? What's to stop Apple saying, "OK well we will just sell our phones without a profit too so we can keep charging 30%"?
I don't understand what they are trying to prove with this argument.
I don't see a situation where this doesn't open up arguments against MS and Sony to open up their stores etc.

it's just one part of an argument, one that relates to the current state of the Xbox store and a common economic strategy in the console industry that makes it distinct from an iphone or ipad, the circumstantial distinction just contributes to a difference in the percentage microsoft takes and illustrates how important the custom hardware in the console is (apple is trying to argue Xbox, switch and PS5 are all exactly the same as iOS devices). It pairs with the argument that consoles are specialty devices where smart phones are general purpose computing devices like desktop computers.

Their obsession with this technicality is weird though since it has almost never applied to Nintendo, I'm glad they finally started emphasising the latter argument since that is the only line of reasoning that leads to a meaningful distinction which gives justification for closed off consoles.

 

[DaGwaphics]

Despite Xbox shortages, Microsoft reports $3.6B in Q3 gaming revenue, 232% growth in hardware sales

As per the company's fiscal third quarter earnings report, Microsoft's Xbox division posted $3.6 billion in revenue, up 50% year-over-year. Microsoft also

www.geekwire.com

Xbox content and services revenue also increased by 34%, or $739 million, in the March quarter, which Microsoft claims was “driven by strength from third-party titles, Xbox Game Pass subscriptions, and first-party titles.”

Read that sentence again.

The 34% increase = $739m.

The quarter before this they did over $2b in third party sales alone (their first time over that threshold).

 

[CobraAB]

So? Pretty sure Sony doesn't earn money from pure hardware sales either.

PS3 was certainly a bloodbath for Sony.

 

[Magnific0giganticus]

O

Read that sentence again.

The 34% increase = $739m.

The quarter before this they did over $2b in third party sales alone (their first time over that threshold).

Ok. I stand corrected. It's not as bad as I thought, just bad. Still no profit.

 

[IntentionalPun]

PS3 was certainly a bloodbath for Sony.

They actually EVENTUALLY sold it for a profit... in like 2010 or something.

But I'm sure that didn't even come close to making up for the losses.. although they did win the "Blu Ray vs HD-DVD" war which was probably aided by PS3, and they continue to get licensing fees for that.. although of course BR completely flopped compared to industry expectations and all of their DRM BS never ended up mattering.