Kinect Only Costs $56 to Make

[Jezzascmezza]

Is this really a surprise to anyone?
Microsoft are making a lot of money?
Oh well, I'm just satisfied in knowing that I'll never give them an extra 90 dollars.

I feel microsoft is kinecting with my ass.

Tee hee.

 

[Excludos]

I love how so many people read the head line and starts raging over how wrong Greg is, while he spesificly pointed out himself: It's worth noting that the $149.99 price tag also goes towards developing the technology and manufacturing it, not to mention the $400 million that Microsoft spent on marketing the launch.

 

[Something Amyss]

Ok, i saw this and i laughed.
HARD.

Me too. Especially when thinking about what it was supposed to be capable of compared to what they made it capable of.

They cut the technical appeal and then hit up the casual base for an extra hundred bucks. Yeah, kinda amusing.

 

[Exort]

Kinect Only Costs $56 to Make

Technicians at UBM TechInsights took apart Microsoft's Kinect unit and determined that all of its parts are only worth a little under a third of the retail price.
...
It's worth noting that the $149.99 price tag...

Math fail. $56 is a little OVER a third of $149.99

Maybe it is because they added the manufacture cost?

He said the parts cost a little under a third of 150.
and the title says kinect cost 56 to make.

edit:
Never mind.
"but UBM believes that the chips, cameras and microphones in the unit cost a grand total of $56."
shows that the guy that wrote this fails at math.

 

[Something Amyss]

It's a shame this story is spun so horribly.

It doesn't factor in the shipping costs per unit, the fact retail stores up the prices to make their profit, the different VAT percentages around the world.

It also isnt anything new that a product is sold at such a high ratio to cost to make. You think those dollar cans of cola cost a dollar to make?

Except it's in comparison to units which sell at a loss factoring those in. It's not spin, it's within the context of the way a console or major peripheral is marketed. And while it doesn't cost a dollar to make a can of soda, Pepsi isn't selling you a can of cola to push you into the market for something else.

Everything else is silly. Markup on computers and electronics tend to be small by comparison. VAT is hardly an issue, especially when you factor that VAT makes (for example) the UK price roughly 1.6 times that of the US, not impacting the base price as given. Pushing a console or peripheral at a loss improves penetration and allows you to move the items which are more important, those licensed games you want in people's homes. Actually, there's a lot more benefit to market penetration that improves the value of selling at a loss, too.

 

[PeePantz]

I love how so many people read the head line and starts raging over how wrong Greg is, while he spesificly pointed out himself: It's worth noting that the $149.99 price tag also goes towards developing the technology and manufacturing it, not to mention the $400 million that Microsoft spent on marketing the launch.

It's worth noting?!?!? This isn't "worth noting", this is the article. If anyone who read this thinks that there is a $90 plus profit for Microsoft, then this article is not only heavily biased and very misleading, it is downright irresponsible.

Also, do people think Microsoft owns all their distribution and shipping companies they use? How 'bout all the Wallmarts, Gamestops, GAME stores, Best Buys, etc.?

 

[strangemoose]

well i would never pay for the casual family oriented stuff but still that's crazy over priced

 

[Lt. Vinciti]

Ok, i saw this and i laughed.
HARD.

This.

How many Kinects were made with just the "Massive Ad Budget"



..

and the Kinect spam of Escapist readers >.>
Ownd!

 

[Swifteye]

holy fuck, I'm planning on buying a kinect, but knowing that, I feel microsoft is kinecting with my ass.

You do know that everyone from the people who make the device to the people who put in there stores have to be paid for there work right? I mean remember what the extra credits guy said about how much game companies get when they make a product? A very small amount under normal circumstances.

 

[Not G. Ivingname]

This the only way to really curb the production cost and marketing without needing to selling an obscene number of units. With around 70 dollar unit profit per unit (I guess it takes 20 to package and ship the stuff, just a wild guess) then it will only need to sell around 10 million in it's life time to start making profit.

 

[Sephiwind]

Well I'm not really one to side with Microsoft but I have to say i'm not that surprised. yeah it's $56 for the parts, but you also have to factor in how much it costs per unit to put it all togeather. Plus you have things like warehousing, worker salaries, and shipping. Plus you have the chunk of money that is taken out by the retailers.

My biggest question is that out of the $400 million how much of it went to Circ de Sole? (or how ever it's spelled)

 

[matrix3509]

Yeah what about total cost of man-hours spent programming the hardware for the thing, plus man-hours spent bug-fixing? You can't just do some simple subtracting like that and expect to come out with anything close to an accurate answer. Also factor in how much manufacturing the individual parts cost. How much it costs to put the whole thing together, and what cut of the profit is going to retailers?

Factor in all this and the resulting profit for microsoft is far less.

I imagine all this so called "tech firm" does is sell misinformation to stupid people. You wanna make something even close to what the Kinect does for $56? Yeah, good luck with that.

 

[DayDark]

holy fuck, I'm planning on buying a kinect, but knowing that, I feel microsoft is kinecting with my ass.

You do know that everyone from the people who make the device to the people who put in there stores have to be paid for there work right? I mean remember what the extra credits guy said about how much game companies get when they make a product? A very small amount under normal circumstances.

Yeah, I guess it's a matter of perspective. 90$ sounds a lot on paper, maybe it really isn't.

 

[Jfswift]

I'm slightly interested in Sonys version but that's only because it has buttons (aka it can work as a gun). I probably wont be getting a Kinect, no matter how cool it sounds because it relies entirely on hand movement.

 

[Vryyk]

Sure, R&D, shipping costs, advertising, and all that good stuff is free. We're totally getting screwed over here.

 

[mad825]

eh, this article is misleading...there are many other factors which will cost MS money, just because the hardware may cost $56 doesn't mean that they are getting the full profit of $93.99.

to remind you idiots that delivering(transporting),retailing, production and the packaging have a fair bit of a cost in itself.

If you actually read the Thread you will realize he did said that.

"It's worth noting that the $149.99 price tag also goes towards developing the technology and manufacturing it, not to mention the $400 million that Microsoft spent on marketing the launch. "

Too smart to read, ehh?

:/

look at the replies...

 

[kristiankramer]

So the 93 dollars go to:
* packaging costs
* shipping costs
* sales costs (percentage that goes to the stores that sell the Kinect)
* development costs
* marketing costs (and let's not pretend that Microsoft is the only company spending hundreds of millions of dollars on marketing)
* shareholders
* ...

So, sure they make a profit, but that's what they're in the business game for. And of course they know what a loss leader is. Thing is, it doesn't need to be a loss leader. It's selling like crazy already. *rolls eyes*

And no, I do not have a Kinect. May buy one somewhere next year or so.

 

[Treblaine]

You know exactly what company exec think when they sell gaming hardware that isn't lossleader:

"Hey, we don't even have to make any good games to serve our customers, just reach for a wider and wider and wider audience and everyone who buys one... well fuck that, we've got our profit from them"

Look what happened when PS3 was a huge loss leader, how much time, money and effort Sony spent on building an amazing games collection for PS3:

SHOOTERS: Resistance (2, 3), Uncharted ( 2), Killzone (2, 3), SOCOM (Con, 4), MAG, Warhawk, Super Stardust HD, Pixeljunk Shooter (2)

PLATFORM: Folklore, Heavenly Sword, Ratchet & Clank (Tools, Booty, Crack), Infamous (2), Demon's Souls, God of War 3, LBP (2), Dark Mist

DRIVING: Motorstorm (PR, Apoc) Wipeout HD Fury, Gran Turismo (Pro, 5), Twisted Metal

3rd Party choosing PS3 exclusive: MGS4, 3D Dot Game Heroes, Ridge Racer 7

Now that's a company making money off GAMES, the things that really matters when it comes to gaming... not mere hardware.

That's a joke, if anything loss leading has the opposite effect, they pander, and only make "big sellers", refusing to take risks, look at all the squeals in that list...

No joke. Consider that almost all are Brand-New IPs for the PS3:

Spoiler: Resistance, Uncharted, LittleBigPlanet, Infamous, Heavenly Sword, Folklore, Motorstorm, MAG, Demon's Souls, Pixeljunk.

,

,

,

,

,

,

,

,

Sony has taken risks with new IPs, in Quantity and Quality, they have the most breadth and variety and they have clearly strived for excellence and uniqueness on each one. I mean have you seen the Killzone 3 multiplayer beta? It's utterly breathtaking, and I'm talking as an enthusiast PC gamer here.

HOW!?!? Please tell me HOW you can dismiss all of these great games?

Sequels aren't bad simply because they are sequels, it's the Madden type sequels or yearly sequels from the same franchise (call of duty) where hardly a thing changes, that's what people mean when they scorn sequels. Nothing wrong with doing another game in the series if you really do something different or worth while.

"they pander, and only make 'big sellers' "

Wait, are you still talking about Sony? Their games never sold as well as Microsoft's games, they depend on many different games selling 2-3 million units. Sounds more like you're talking about Microsoft, who profit or break-even on hardware. It's undeniable they are the ones most guilty of pandering and depending on only a few big sellers, always bragging about Halo sales.

I think the reason Xbox 360 games sell so well is they are so few and far between, rarely more than 1 exclusive (of a given taste, like shooter) per year, 360 gamers are so deprived they snap them up ASAP.

Microsoft is UTTERLY dependent on very long standing franchises: Halo, Forza, Fable (I'm hesitant to include Gears of War as I played that on PC first, doesn't really count as value to my 360. It would be like including Left 4 Dead). Not that that is even necessarily a bad thing, Halo 3 may have lifted and remixed whole elements of previous instalments but it was still a really really good game. Shame all 360 really has is Halo. I bought a 360 pretty much for Halo, but Microsoft seems to rest on its laurels, use Halo to sell 360 and then mostly neglect the system depending mostly on third party multi-platform games or half-assed 2nd party productions (Gears 2) to satisfy their customers.

For example why is Halo the ONLY exclusive FPS on 360? PS3 has Three great FPS franchises. PS3 also has Three third-person-shooter IPs, Five driving franchises and over half-a-dozen platforming franchises and so many arcade type games, most with multiple instalments.

The internet idiom "PS3 has no gaemz" clearly ironic even if those who use it don't realise it.

And this is mostly down to Sony's efforts in producing and publishing and supporting third party productions at great expense and effort.