There’s been plenty of Xbox 360 coverage everywhere in the last few days and I’ll pass on the profiteering, thuggery, and rioting as they were sadly predictable. More worrisome though are the reports of glitches, although it remains to be seen how common they are.
However, there were some unusual items that I thought were worth noting:
- Just like the original Xbox, Microsoft will lose money on every Xbox 360 it sells. That’s not unusual in the game console biz, but there had been speculation that Microsoft would reduce the amount of the loss on the Xbox 360 and that certainly didn’t happen (note that the following are “bag of parts” costs without assembly and other costs):
… pushing the loss per unit to $126. These estimates include assumptions that Microsoft is getting a discount on many components.
That was the case with the first Xbox console, which contained about $323 worth of parts and materials when released, but sold at retail for $299. It’s certainly not going to help Microsoft reverse the trend of losses in its home-entertainment segment. In the fiscal year ended June 30, that unit lost $391 million on sales just shy of $3.25 billion. That’s a little more than 8% of Microsoft’s total sales of $39.8 billion.
A Microsoft spokeswoman said that the company’s plan calls for a “gross margin neutral” strategy through 2006, meaning that between the sales of consoles, game software, and accessories, it expects to essentially break even. Profits should follow in 2007.
- As far as making it up on the games, Microsoft is not following the other console game publishers to a new $60 (US) price level:
Microsoft wanted to reassure consumers that they’d be able to get top-of-the-line titles for the next generation at the same price they have paid for current generation games, says David Reid, the company’s director of platform marketing for the Xbox.
“Our perspective on this is clear,” Reid says. “We believe we can have a good business model in parity with what we have today (on pricing).”
- Leander Kahney spots an interesting press release about the development of the acclaimed Xbox 360 UI:
- Jonathan Hayes, the design director for the Xbox 360, also brought in some outside talent:
He started by hiring Astro Studios, the San Francisco firm that had designed the high-powered, high-testosterone gaming PCs from Alienware. But he also wanted to merge the Western concept of power with an Asian influence of grace, so he also brought on Hers Experimental Design Laboratory in Osaka, Japan, which had designed PCs and cell phones for the Asian market.
In order to guarantee Xbox 360 launch-day availability of flagship title Perfect Dark Zero, Microsoft sent the game to manufacture before it had passed certification.
It was an extraordinary gamble. The game passed certification after the disks had been pressed. If the company had waited for certification to come through before okaying manufacture, Perfect Dark Zero would not have been available at the launch of Xbox 360.
Having ordered replication of the disks, Microsoft and Rare had to cross their fingers for a positive certification. If Microsoft’s notoriously strict procedure – which we understand was not eased for PDZ in any way – had failed, the disks would have been trashed and the game would have been late.
Rare is Rare Ltd, a 20-year old game design studio now owned by Microsoft that is headquartered in Twycross, England “on a remote piece of farmland in the rolling English countryside, dozens of miles from the nearest big city.”