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Are consoles sold under production price?



  • MartinmasMartinmas Austin, TXPosts: 239Member Common

    For those that do not understand why a company would sell their consoles at a lose look up the Razor-Razor Blade business model.

    Consoles = Razor

    Games and accessories = Razor Blades


    In the past most companies sold their consoles at a loss (except Nintendo) at launch but this time around it looks like only Sony is actually making a profit on each console.  People buying multiple games plus extra controllers and such makes a much higher profit than the $20-$50 they lose on the console itself.  So having more consoles in more peoples hands makes the most sense.

  • TorvalTorval Oregon CountryPosts: 7,353Member Uncommon
    Originally posted by lizardbones

    Originally posted by Daranar

    Originally posted by lizardbones Sony stated that they are not selling their consoles at a loss. Some people are even saying that Sony will turn a profit on each one shipped. Not much profit, but $25 to $55 per unit shipped isn't chump change.
    Lol, in the time it took me to write mine, there is a good pit of clarification to my question/point.  And very nice, I didn't know they lowered the price for the low end models.  Cool deal.  At $399 I may get a PS4.
    For the previous generations, Nintendo was really the only company making a profit on their consoles, but this generation they've reversed it. Nintendo is losing money on each console sold, while Sony is making money on each console sold. Microsoft is very likely making money on each console sold, but we don't know for sure. Given that they are using a lower end graphics part and lower end memory, it seems likely that they are going to make money.

    This makes sense to me.  Hardware was more expensive when the last generation released.  It seems that if you could build a cheaper PC then the console hardware costs to Sony and Microsoft would be even lower.  It only makes sense, given the price point, that the new consoles are paying for themselves.

  • CleffyCleffy San Diego, CAPosts: 4,639Member Uncommon
    $399 for a complex AMD processor and some other shit.  Of course they are selling at a loss.  The processors in the PS4 and Xbox One are huge.  There is no way AMD will sell them processors at a loss for themselves, so you are looking at $200 on the processor alone.  Tacking on the memory, the board, the disk drive, the hard drive, the enclosure, and the assembly costs, its going to be closer to $100 more than what these two are selling them for at a mass quantity rate.
  • WhiteLanternWhiteLantern Nevada, MOPosts: 2,732Member Uncommon

    The old business adage is: "You make money on the blades, not the razors.".

    It's been said to apply to videogames as well.



    edit: Apparently I should have read the whole thread. I've been beaten to the punch.

    I want a mmorpg where people have gone through misery, have gone through school stuff and actually have had sex even. -sagil

  • DrakynnDrakynn The Pas, MBPosts: 2,030Member
    Yup selling one product at a loss to stimulate sales in supporting products an old business tactic as others have said.Works for bars and Nightclubs and other service industries,works for all sort of products that need parts replaced regulalrly and has worked for consoles in the past when their production and research costs were higher than what the public was willing to pay.
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