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Microsoft's Yusuf Mehdi  (Source:
The Xbox 360 will also get another three years of support

A Microsoft executive said that each sale of the upcoming Xbox One console will break-even or be sold at profit from its launch date.

According to Microsoft's Yusuf Mehdi, the company plans to make money on selling games for the console and the Xbox Live subscription (which, he noted, has grown to 48 million members now). 

"The strategy will continue which is that we're looking to be break even or low margin at worst on [Xbox One]," said Mehdi. "And then make money selling additional games, the Xbox Live service and other capabilities on top. And as we can cost-reduce our box as we've done with 360, we'll do that to continue to price reduce and get even more competitive with our offering."

Mehdi, who spoke at the Citi Global Technology Conference this week, also said that Microsoft plans to support the Xbox 360 for another three years. The company plans to release over another 100 games for the console. 

"You've seen us over the years constantly be focused on profitability and improving year over year," said Mehdi. "There are different points in the cycle when you invest in new hardware. If you look at 360, that platform lasted for seven to eight years and it's going to go for another three years. It's incredibly profitable now in the tail. 

"Some of these things take some time in the launch year in which you invest, and then they they play out over time. We're going to continue to invest in Xbox 360, and the two devices can work in concert. So it's not like the day we ship Xbox One your 360 won't work. We'll continue to support it."

Microsoft recently announced that the Xbox One will officially launch November 22 in 13 markets, including Australia, Austria, Brazil, Canada, France, Germany, Ireland, Italy, Mexico, New Zealand, Spain, UK, and USA. It will make its way to other markets in 2014.

Source: Games Industry International

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By inighthawki on 9/6/2013 11:12:28 AM , Rating: 3
Don't forget R&D costs, which typically make up for the cost of most devices. People seem to forget this and assume that companies are selling their products at nothing more than manufacturing costs. If that were true a brand new ivy bridge-e would be like $5

By inighthawki on 9/6/2013 2:25:49 PM , Rating: 5
There is WAY more R&D than just the CPU/GPU design. Choosing the components to begin with takes time. Test and development of the different configurations, OS and API development. The Kinect actually does have a custom designed processor in it made by Microsoft, and MSR put significant effort into the technology in Kinect 2, which despite whether or not you like the idea, you must admit is impressive.

What on Earth makes you so shortsighted into thinking the R&D for a console comes down to j7ust telling AMD that they want a processor?

By Alexvrb on 9/8/2013 3:26:13 PM , Rating: 2
Xbox 360 was designed much that same way. Xbox One has quite a few custom bits and bobs, more so than its predecessor (even if it isn't all the work of MS directly). Have you looked at the most recent breakdowns of their APU? It's quite interesting.

In the end, I think final performance will be roughly the same for both. Similar to how Xbox 360 and PS3 are today. Some games/engines will favor one or the other, of course.

By purerice on 9/7/2013 12:38:01 PM , Rating: 2
You are right although the question is, are they factoring in long term costs such as R&D+depreciation etc into the cost of each unit sold, or are they merely talking about the marginal cost of production/unit?

R&D is more than just researching hardware. Game manufacturers could consider most of their development costs to be R&D, for example. If you are facilitating developers' attempts to get titles ready for launch or just to optimize for your hardware, that could be R&D.

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