Are consoles sold under production price?

Martinmas

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.

Cleffy

$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.

WhiteLantern

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.

Drakynn

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.