Just because there are costs other than the "$56 cost-to-make" that doesn't mean ALL then $93 remaining goes to the in-between costs.kristiankramer said:
Development cost, marketing cost, licensing costs are NOT PER UNIT! Don't act like they are, those debts have to be held away separately for consideration AFTER returns.
Packaging, shipping are insignificant to a large and efficient manufacturing process due to the economy of scale. Also a lot of shipping/storage costs can be picked up by the retailers when batches are sold to them.
This leaves most of the $93 to retail-markup and no way is Microsoft going to allow retailers and other middlemen to take 2/3rds of the list-price of their product. Maybe a smaller company would have to settle for that but no, they should be lucky to get 25% of the retail price, any Microsoft exec who brokers a deal of a Kinect batch at $56 per unit to Amazon.com (who sell for $149) will get brutalised.
This is complicated because retailers do not buy from manufacturers at a set price per unit, it's not like we buy from a supermarket. It's wholesale. Deals are negotiated for higher orders, and how much they may end up paying "per unit" can vary a lot. This is the point where microsoft actually makes money, selling giant truckloads of Kinect to Best Buy, Amazon, Wal-mart or other middle men who may then sell the product onto smaller stores or overseas (hence the usual mark-up of Kinect over here).
Microsoft is easily making over $60 for ever Kinect that is sold and may make MORE per unit if demand goes up, retailers will be prepared to pay MORE per batch - so Microsoft gets more per unit - as retailers vie to be the ones that stock it. The retailers may even pay $149 or more per unit and sell it at that price (or even higher)... but then they will buy a metric-shit ton of Kinect-shovel-ware at low-low price and try to sell to the same people at $60 per game.
Mostly, the $56 manufacture cost is a very clear indicator that Microsoft will make a large profit from the hardware. Exactly how much, who can say for definite, but still this shows where their emphasis is.
Of course they will have costs in development, licensing and marketing and they deserve to be able to make a profit SOMEWHERE... but I make the case the profits to pay of those debts and then prosper overall should come from games, not hardware. It just leads to a conflict of interest.
If you have amazing games you don't need such a vast marketing budget, it will to a great extent advertise itself. Like Uncharted 2, the time and money spend making it look almost photo-realistic became a marketing point in TV adverts! Again the investment in the capability of Move technology became a genuine marketing point just be demonstrating it in a simple and entertainingly snarky way.
And I'm not convinced Microsoft have invested enough in making great games for Kinect that are inherently appealing... they seem to need a Half-Billion budget to convince people with catch-phrases like "YOU are the controller".
