Microsoft takes a $100-$200 loss on all Xbox Series X|S sales

This is a contradiction.

It has been long confirmed that the dollar story didn't hold up when people converted the price increases based on the currencies that saw the PS5 price rise, which ended up nearly all being the same amount which doesn't make sense if it's about strength of currencies alone.

Regardless if it was, Sony has given the PS5 iirc 3 revisions to make it cheaper to produce, I don't think they would do it that much in such a short amount of time if they weren't losing money on the PS5 consoles like Microsoft is Xbox.

Imo, I don't expect any price cuts this gen.
It has to be currency-based. For the first time since the Euro was introduced, the USD and Euro are pretty much at parity. Up until recently, the Euro was worth 15-20 cents more than the USD. In addition, European countries have Value Added Tax (VAT) baked into every purchase. In Germany, VAT is 19%. A PS5 in Germany was 500 Euro, which means that it cost 405 Euro plus tax. When the Euro was worth roughly $1.20, a PS5 in Germany cost $486 prior to tax even be added ($600 with VAT). Nowadays, they would be losing roughly $81 per sale before VAT is added, which has to be why they increased the price.
 
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The_Mike

I cry about SonyGaf from my chair in Redmond, WA
Jim has already confirmed that PS5 is now being sold at profits.
Just make him look more like an ass when they are the only ones atm that has raised the console prices.

It so makes sense Microsoft does it because they are losing money on sales (even though I strongly disagree they should do it because consumer reasons)

But Sony flexing they are selling with a profit already and still raise the prices is a dick move.

People are gonna buy anyway so it's just free money in the table.
 
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Just make him look more like an ass when they are the only ones atm that has raised the console prices.

It so makes sense Microsoft does it because they are losing money on salsa (even though I strongly disagree they should do it because consumer reasons)

But Sony flexing they are selling with a profit already and still raise the prices is a dick move.

People are gonna buy anyway so it's just free money in the table.
MMM... salsa.
 

The Shepard

Member
The XSX is faster, quieter, has a larger SSD, runs cooler, has virtually no reports of coil whine, is smaller, and is cheaper in most territories it is sold in.

A few reasons why it looses money compared to the PS5 instead of "hurr durr bad engineering ".

Faster? Ps5 has a faster ssd and loads games incredibly fast only last gen games are slower at loading on ps5. Ps5 has much smaller installs to offset the ssd size disadvantage, I got no coil whine on mine but the disk drive is definitely louder on ps5. I know this as I have both the ps5 disk and xbox series x.
 
Faster? Ps5 has a faster ssd and loads games incredibly fast only last gen games are slower at loading on ps5. Ps5 has much smaller installs to offset the ssd size disadvantage, I got no coil whine on mine but the disk drive is definitely louder on ps5. I know this as I have both the ps5 disk and xbox series x.
The PS5's hard drive is faster, but the XSX has a near 2 TFLOP computing advantage.
 

DenchDeckard

Gold Member
A few things:
  1. In August 2021, Sony (CFO, Hiroki Titoki) did confirm that the PS5 is no longer selling at a loss. Source.
  2. Microsoft never made a comment like Sony that they were breaking even. There never was any hint.
  3. And we can't assume this for Microsoft because they have confirmed that MS has never made any profits from selling Xbox consoles. So historical data doesn't support it either.
  4. However, that's not how Sony operates. Apart from the early days of PS3, Sony has always made profits on selling hardware. For instance, the PS4 also started making profit per hardware unit sold 7 months after launch, confirmed by Sony CEO Kaz Hirai. That's very much in line with PS5's profitability, which started turning profits after 8 months.

Thanks for sharing. ignore me I had not seen the comments that it was making a profit and was asking for proof which you have supplied, I cant read that page but I trust you. :)
 
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A few things:
  1. In August 2021, Sony (CFO, Hiroki Titoki) did confirm that the PS5 is no longer selling at a loss. Source.
  2. Microsoft never made a comment like Sony that they were breaking even. There never was any hint.
  3. And we can't assume this for Microsoft because they have confirmed that MS has never made any profits from selling Xbox consoles. So historical data doesn't support it either.
  4. However, that's not how Sony operates. Apart from the early days of PS3, Sony has always made profits on selling hardware. For instance, the PS4 also started making profit per hardware unit sold 7 months after launch, confirmed by Sony CEO Kaz Hirai. That's very much in line with PS5's profitability, which started turning profits after 8 months.

Don't forget for the first point that a lot's of things has impacted the cost production since August 21.
 

PaintTinJr

Member
Just make him look more like an ass when they are the only ones atm that has raised the console prices.

It so makes sense Microsoft does it because they are losing money on salsa (even though I strongly disagree they should do it because consumer reasons)

But Sony flexing they are selling with a profit already and still raise the prices is a dick move.

People are gonna buy anyway so it's just free money in the table.
The first party investment risk has to be funded from somewhere. Had they followed the wait for next year's E3 path of others, then yeah, it looks pretty rough raising prices in bad economic times around the world, but it might be a case of that's why PlayStation and Nintendo can offer bangers at the rate they do because they work from a plan that requires the hardware to pay its way within 2years -typically - affording them more bounce for delivering great games at a good cadence.
 
My only concern is that Microsoft has vast sums of money that it can pull from it's more profitable sectors (Azure, Office365, etc) and pump into it's not so profitable sectors. I understand that Phil cares about gaming, but shareholders don't. As soon as one of those profitable sectors fails to meet investor targets, and that stock starts to slide, the underperforming divisions will be reigned in/restructured.

It's understandable, the cloud push for Xbox, tons of money saved not wasted on logistics, manufacturing, servicing, warranty, etc. But, then you shift some of those costs towards the datacenter. Cloud gaming can work, but it will require devices like Netflix's OCA to be placed into a significant number internet service providers network's.
 

PaintTinJr

Member
Sony has airlifted consoles before for launch. That costs double if not triple the standard shipments via containers. Even if shipping costs doubled they are only a fraction of the overall costs. You are looking at $2 per console instead of $1. Just look up how cheap the shipping is per container. those big ships carry 50,000 containers. The shipping costs are a fraction of the BOM. The BOM would largely be unaffected by shipping costs anyway.

Sony ships large TVs all across the world. Their TV prices have remained mostly the same. Why are we assuming that only consoles are affected by shipping costs?

PS5's BOM according to bloomberg's early reports was $450. After the retailer cut and shipping costs, Sony was losing money, but not by much. The fact that they started making a profit within six months tells me that they went down to $420-430 pretty fast. If Phil is telling me that the BOM for his 12 tflops console was $650, im gonna call bullshit. For $200 more, im expecting more than just 10-15% better performance.
I agree with most of what you've said here, but they aren't even getting 10-15% better performance - it is just paper theory performance on next-gen workloads - and you are massively underestimating the savings Sony can pass on to the PlayStation division by amortised costs and volume buying - say by using the same AMD processor for their XR chips in their TVS and using the same GDDR6 across multiple products, and sharing electrical component volume buying across all their product range.

Take a look at the liquid metal cooling they've used compared to the XsX's cooling system. The cost reductions will be massive alone for PlayStation as the APU improves yields and the liquid metal effciency improves with 10m consoles in the wild, needing less metal for heatsink, less weight for parts in, and less weight for shipping out. Xbox is competing against one of the very best - if not the best - electronics manufacturers in the world, while effectively paying retail at every stage.
 
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Gudji

Member
The PS5's hard drive is faster, but the XSX has a near 2 TFLOP computing advantage.
And yet it barely shows. lmao

Faster? Ps5 has a faster ssd and loads games incredibly fast only last gen games are slower at loading on ps5. Ps5 has much smaller installs to offset the ssd size disadvantage, I got no coil whine on mine but the disk drive is definitely louder on ps5. I know this as I have both the ps5 disk and xbox series x.
Its an incredible piece of hardware for the price the rest is talk.
 
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SF Kosmo

The Trigglypuff
They're right to do it though. If their systems were $100 more expensive they'd sell dramatically less.
 
That's what they tell you so you don't feel bad about paying what you pay for the product. It's called consumers justification.
 

The_Mike

I cry about SonyGaf from my chair in Redmond, WA
The first party investment risk has to be funded from somewhere. Had they followed the wait for next year's E3 path of others, then yeah, it looks pretty rough raising prices in bad economic times around the world, but it might be a case of that's why PlayStation and Nintendo can offer bangers at the rate they do because they work from a plan that requires the hardware to pay its way within 2years -typically - affording them more bounce for delivering great games at a good cadence.
You make it sound like the reason for Microsoft lacking behind is because they lack money.

I mean, they are lacking, but money is not the problem.
Especially when you look at the Acti Bliz acquisition.
 
Don't forget for the first point that a lot's of things has impacted the cost production since August 21.
And they have raised the price to cover the increased cost of production. If PS5 was in the red, after Sony confirming to its investors that it's profitable, I'm sure Sony would have updated its investors.
 

DaGwaphics

Member
You make it sound like the reason for Microsoft lacking behind is because they lack money.

I mean, they are lacking, but money is not the problem.
Especially when you look at the Acti Bliz acquisition.

IKR. It's such a ridiculous idea. Xbox isn't a popular as PS, news at 11. As a result of that, they work the pricing as hard as possible. Look at the BF deals coming on XSS and deals we've already seen (discounts with free $70 third-party games). MS could have easily turned a profit with X1 if they had stuck to the official pricing and limited holiday discounts to $50. Instead the X1 was available at $250 or less almost the entire year and holiday deals went as low as $160-$180. That's a good thing for Xbox buyers, who on earth would celebrate paying more for the same technology so that the company turns a profit on the hardware. :messenger_tears_of_joy:
 

ReBurn

Gold Member
Take a look at the liquid metal cooling they've used compared to the XsX's cooling system. The cost reductions will be massive alone for PlayStation as the APU improves yields and the liquid metal effciency improves with 10m consoles in the wild, needing less metal, less weight for parts in, and less weight for shipping out. Xbox is competing against one of the very best - if not the best - electronics manufacturers in the world, while effectively paying retail at every stage.

Meme Reaction GIF by MOODMAN


Please show us where Microsoft is paying retail for console components. Please show us where the cost of liquid metal vs. thermal paste is the deciding factor in console profitability.

You always make these bold claims yet you never back them up.
 

ReBurn

Gold Member
Jim has already confirmed that PS5 is now being sold at profits.
Jim didn't confirm that. He confirmed that they were breaking even on the standard model. Jim Ryan actually said:

"I’m pleased to say that the PS5 standard edition will break even from next month’s production," Ryan revealed. "From then on, we project that it will gradually become increasingly profitable."

He projected that it would gradually become increasingly profitable. I was not able to confirm whether he said it actually did become profitable but I have to imagine that with the change in global economics and the resultant price increases in many markets that gains in profitability had declined. That's sort of backed up by the sharp drop in operating income this past quarter despite record revenue.
 

THE DUCK

voted poster of the decade by bots
I don't buy this either, by now they would be breaking even on some and losing it a bit on others, but not $100-$200. If they are still losing that much per console, whomever is in charge of purchasing parts and assembly should be fired.
 
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I don't buy this either, by now they would be breaking even on some and losing it a bit on others, but not $100-$200. If they are still losing that much per console, whomever is in charge of purchasing parts and assembly should be fired.

Maybe the hardware is difficult to redesign to reduce costs. Its all I can think of to be honest.
 

NickFire

Member
I don't buy this either, by now they would be breaking even on some and losing it a bit on others, but not $100-$200. If they are still losing that much per console, whomever is in charge of purchasing parts and assembly should be fired.
Kind of harsh IMO. Don’t forget that they don’t have the same benefits of scale that Sony does for current gen. Even if sales of the generation were dead even, MS has two models with significant spec differences. And one of those models has more powerful processors than PS5, further adding to cost. On top of that, MS chose to hold the price so far despite rampant inflation.
 

Bernkastel

Ask me about my fanboy energy!
Well, there goes the legitimacy of all the cries of amazing engineering for their consoles.

There's no valid argument for incredible hardware engineering when they're literally losing their shirt on every console sold. Any Tom, Dick, and Harry can slap a bunch of off-the-shelf components together in a $700 box and sell it for $500.

Great engineering means smart design choices that maximize performance while minimizing cost.

A $200 loss per box (also on the XSS?!?!) is staggering; especially when we're almost 3 years post-launch.
Ok, thanks... that's still staggeringly bad.

The XSS is supposed to be a cheap console sold at a profit to offset the losses on XSX. If they're also losing on XSS then it defeats the whole point of that console even existing in the first place.

This just makes XSS look even more like a huge mistake. Devs hate it and now we hear that MS is even not making any profit on it.
The ONLY other console to sell with a loss as much as $200 was the PS3 and that was universally seen as a disaster.
How clueless are you? The PS3 cost 900 USD to manufacture and at that time sold to an audience who barely bought anything online. The Series S is online only and only sold at a loss of 100 USD, and even with Series X Xbox has cultivated a userbase that relies less on Physical sales. Games now make way more money as Microsoft takes 30% cut from all online MTX that people spend on. How did you assume Microsoft was making as much loss as PS3?
Also why should any of this matter to the end user? Why would a Series X be seen as a disaster for the end user? PS3 was seen as a disaster because it cost 600 USD and third party games looked substantially worse than 360, not because it cost 900 USD to manufacture.
 

Helghan

Member
Jim didn't confirm that. He confirmed that they were breaking even on the standard model. Jim Ryan actually said:

"I’m pleased to say that the PS5 standard edition will break even from next month’s production," Ryan revealed. "From then on, we project that it will gradually become increasingly profitable."

He projected that it would gradually become increasingly profitable. I was not able to confirm whether he said it actually did become profitable but I have to imagine that with the change in global economics and the resultant price increases in many markets that gains in profitability had declined. That's sort of backed up by the sharp drop in operating income this past quarter despite record revenue.
Was this before or after the price increase? It'll gradually become more profitable because we increased the price, yeah no shit Jimbo...
 

oldergamer

Member
Faster? Ps5 has a faster ssd and loads games incredibly fast only last gen games are slower at loading on ps5. Ps5 has much smaller installs to offset the ssd size disadvantage, I got no coil whine on mine but the disk drive is definitely louder on ps5. I know this as I have both the ps5 disk and xbox series x.
I've been saying this since before PS5 launched. SSD performance is dependent on the file size of the data transferred on it. If you have lots of small files it can even be slower than a physical disk drive. it excels at large file transfers. One drive won't always be faster than the other.
 

PaintTinJr

Member
Meme Reaction GIF by MOODMAN


Please show us where Microsoft is paying retail for console components. Please show us where the cost of liquid metal vs. thermal paste is the deciding factor in console profitability.

You always make these bold claims yet you never back them up.
Not equal to "effectively paying retail" - with the obvious by comparison to PlayStation being implicit.

It is a reading comprehension issue at your's and DaGwaphics DaGwaphics end, unfortunately :)
 

PaintTinJr

Member
You make it sound like the reason for Microsoft lacking behind is because they lack money.

I mean, they are lacking, but money is not the problem.
Especially when you look at the Acti Bliz acquisition.
Xbox is short of money to do first party games, and always has been by the accounts Microsoft have been unveiling in CMA and Epic vs Apple lately. And they certainly aren't buying ABK as a division, are they now?
 

DeepEnigma

Gold Member
I've been saying this since before PS5 launched. SSD performance is dependent on the file size of the data transferred on it. If you have lots of small files it can even be slower than a physical disk drive. it excels at large file transfers. One drive won't always be faster than the other.
It's not just about SSD and file size, it's about the I/O with a dedicated decompression block and cached ram bypassing the CPU and extraction layer slowdowns.
 

ReBurn

Gold Member
Not equal to "effectively paying retail" - with the obvious by comparison to PlayStation being implicit.

It is a reading comprehension issue at your's and DaGwaphics DaGwaphics end, unfortunately :)
I mean you're straight up making things up. Sony doesn't have an automatic advantage in component pricing because they do some of their own manufacturing. And Microsoft doesn't "pay retail" because they outsource their manufacturing. That's a weird take.

Just like Microsoft, Sony has to negotiate with suppliers for memory, storage, APU/silicon dies, disc drives, lousy thumbsticks, etc. They don't manufacture all of the parts that go into their consoles. Microsoft has an extensive hardware business outside of consoles and would be able to negotiate volume pricing since some of the components in their consoles are identical to the components in their surface devices. The SSD in Series consoles is the same drive as some Surface devices.

Also, both Sony and Microsoft utilize third parties for console manufacturing. Although Sony does manufacture some PS5 consoles themselves, a decent chunk of PS5 inventory comes out of Foxconn factories in China.

Being able to comprehend what you're saying requires that what you're saying makes sense.
 

Cyborg

Member
One positive aspect for Microsoft. You cant make a huge loss if the consoles don't sell...you know? ;)
 

PaintTinJr

Member
Quote me again for a discussion when you get back to reality.
Well, the reality of this thread in a best-case scenario for Xbox is that on average they lost $150 per 15m sold, and for the same 15m PS5's sold they lost $50, so a loss of $1b in hardware subsidisations. If we say a first party exclusive cost 250-350m including marketing, then that's between 2 and 4 extra first party titles PlayStation can afford at the same spend as Xbox.
 

THE DUCK

voted poster of the decade by bots
Kind of harsh IMO. Don’t forget that they don’t have the same benefits of scale that Sony does for current gen. Even if sales of the generation were dead even, MS has two models with significant spec differences. And one of those models has more powerful processors than PS5, further adding to cost. On top of that, MS chose to hold the price so far despite rampant inflation.

They are still buying and building units in the millions, the scale is still huge. Maybe inflation hurts, but costs have been going down on parts too......
But who knows without seeing the true costs.... these companies play games with numbers, they will be like amd charges us $250 for a gpu but forget to mention the bulk rebate of $75 a unit.....i wonder if this is just creative bookkeeping.
 
It has to be currency-based. For the first time since the Euro was introduced, the USD and Euro are pretty much at parity. Up until recently, the Euro was worth 15-20 cents more than the USD. In addition, European countries have Value Added Tax (VAT) baked into every purchase. In Germany, VAT is 19%. A PS5 in Germany was 500 Euro, which means that it cost 405 Euro plus tax. When the Euro was worth roughly $1.20, a PS5 in Germany cost $486 prior to tax even be added ($600 with VAT). Nowadays, they would be losing roughly $81 per sale before VAT is added, which has to be why they increased the price.

This doesn't apply to the non-European countries however.

for the same 15m PS5's sold they lost $50,

Where are ou getting this number by chance?
 

oldergamer

Member
It's not just about SSD and file size, it's about the I/O with a dedicated decompression block and cached ram bypassing the CPU and extraction layer slowdowns.
Both systems have this tech. It also doesn't apply to all file types, so its uses can be more limited. At the same time, it may not make sense to compress data if it's resulting in a slower data transfer from SSD.

I kept telling people here before each console launched that the performance in real-world tests was going to be closer than it is on paper. That has proved accurate.
 
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DeepEnigma

Gold Member
Both systems have this tech. It also doesn't apply to all file types, so its uses can be more limited. At the same time, it may not make sense to compress data if it's resulting in a slower data transfer.
No... they don't.

The XSX does not have a dedicated decompression block. Hence why their games are larger on average, due to the PS5 being able to use Kraken and reduce the size and decompress with zero hit to the CPU performance.
 
No... they don't.

The XSX does not have a dedicated decompression block. Hence why their games are larger on average, due to the PS5 being able to use Kraken and reduce the size and decompress with zero hit to the CPU performance.

I thought it did. But I read that it isn't as powerful as the one in the PS5. The reason for this is because Kraken needed a more powerful decompressor than ZLIB which is what I believe Microsoft is using.
 

PaintTinJr

Member
..

Where are ou getting this number by chance?
I'm struggling to see the angle in which you take issue with the number - as they probably turned a profit before that, meaning the loss I was going with in Xbox's favour based on next-gen thread predictions from a Forbes or Bloomberg article is actually to Xbox's advantage.

If we said it was a differential of closer to $150 per unit loss for Xbox then that equates to even more first party PlayStation games at the same spend. I'm lost at to you taking issue with my Xbox favourable maths :)
 
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DeepEnigma

Gold Member
I thought it did. But I read that it isn't as powerful as the one in the PS5. The reason for this is because Kraken needed a more powerful decompressor than ZLIB which is what I believe Microsoft is using.
It does not. ZLIB can work on standard extraction layers on the PC SSD setups. They have a custom partition on their SSD itself they utilize for their direct storage, etc..
 

adamsapple

Or is it just one of Phil's balls in my throat?
I'm struggling to see the angle in which you take issue with the number - as they probably turned a profit before that, meaning the loss I was going with in Xbox's favour based on next-gen thread predictions from a Forbes or Bloomberg article is actually to Xbox's advantage.

If we said it was a differential of closer to $150 per unit loss for Xbox then that equates to even more first party PlayStation games at the same spend. I'm lost at to you taking issue with my Xbox favourable maths :)

So you don't have an actual source for any numbers you've been writing down here.

Gotcha.
 

PaintTinJr

Member
So you don't have an actual source for any numbers you've been writing down here.

Gotcha.
The headline is at the top and it is widely regarded that both consoles have sold 15m units atleasst - even if some of those Series consoles are XCloud. You do the maths yourself, it isn't a difficult equation, is it? And as for first party games, I even added 100m to get to the 250m( -350m used for PlayStation first party games) that the results of Xbox first party end product suggest less.

All my calculations are favourable to Xbox, and yet you are still taking issue with them, why?
 
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