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How much does Microsoft's hard drive actually cost?

May 06, 2008 in News comments 9

Have you ever wondered how much something actually costs the company? In this case, an analyst breaks down how much it would cost Microsoft to make their hard drive for the Xbox 360. After purchasing various things like VARs, the final packaging and markup, the analyst decides that it costs them a rough $100 to make their hard drive. It costs $179.99 on GameStop, but Amazon offers a steal at $149.99. Therefore, Microsoft earns a nice profit. Either way, they're going to make a move for the better to earn more for themselves since they have no competition.

iSupli representative Krishna Chander expects the hard drive came from electronics manufacturers Toshiba or Seagate . When the hard drive ships to retail, it comes pre-loaded with starter software (i.e. Xbox Live Arcade trials) and “specific Gaming Instructions and some levels of the OS,” said Chander.

Unlike an off-the-shelf drive that can simply be loaded into your standard PS3, Chander explained, the Xbox 360 drive’s pricing also includes color tuning and packaging. This begins to drive the price up from what you might see at an online retailer like NewEgg.
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  • 0
    Matty1357 May 7, 08
    A pencil thats like a dollar something at the local shops is actually sold to them for like 13 cents each or some absurd figure like that, so they aren't even making a double profit.
  • 0
    Synergized May 7, 08
    It's not a huge profit, like you mentioned, Matty, but I like how since they have no competition in their hard drives, thus, they can play with the price however they choose.
    • 2
      iLLmatic May 7, 08
      The prices for both their hard drive and their wireless adapter are unacceptable. The profit IS huge, because you have to think about how many of them they are selling. The reason I highly favor the PS3 hard drive is because it isn't proprietary. You can get any laptop hard drive on the market, MUCH larger than whats available for the 360, and for a better price. The WiFi is also built in. Why is it that a PSP, which costs $160, has built in WiFi, but Microsoft thinks they are justified in selling just an adapter for $100? Its ridiculous.
      • 0
        Synergized May 7, 08
        Sorry, for not clarifying, I meant huge as in ratio, like the pencil example. $50-$80 is a big profit per unit, I do agree.
      • 1
        Cdemon May 7, 08
        You act as if Microsoft are the first to price their first-party accessories ridiculously high. Remember when the PS2 first came out? $50 for an 8mb memory card? Yeah? $50 for a wired network adapter?

        And guys, you're seriously naive or know nothing about manufacturing a product if you think Microsoft pockets that total difference. They probably make $20-$30 per HDD sold... which is still huge for a single unit, yes, but that's how these companies are able to lose money/cut even/make a small profit on each console sold: FIRST PARTY ACCESSORIES.

        Finally, the X360 wifi adapter conforms to 802.11a, 802.11b, and 802.11g. The PSP uses the slowest (802.11b) wifi. The best the Wii/PS3 offer is the slightly better 802.11g. The X360 is the only one to support 802.11a (let alone the other two).
  • 0
    Sonic Flash May 7, 08
    It's interesting to note that MS and Apple now share the same sense of prprietary ownership in their products. By eliminating third party or non-firsty party addons they're screwing their price over. Further, the modern economy is based on specialization to lower costs as opposed to making everything yourself.

    360 HD: $100 for 20G
    External HD: $100 for 500G

    If they weren't using their own products and struck a deal with some other company they could be offering 25x more space in their products.

    To cover my bases: "Atleast the 360 HAS a harddrive unlike the Wii".
    • -2
      Final Blade May 7, 08
      I think they should be offering more space in their products. But that my opinion though.
  • 0
    Shadow of Death* May 7, 08
    IMO, they never should have started with 0 and 20GB....They should have started on the lowest end ('core') with the 20GB, and had the 'premium' with say, 60GB.

    YES, I realize this is mimicing the PS3, BUT on the other hand...

    The PS3 should have started with 40GB or 60GB (They are doing the 40GB thing now though).....The PS3 is more multi-media friendly, so I sure as hell could use more than 60GB of space....I could have put in my own HDD, but meh....Didn't have the extra cash for it....
  • 0
    Sonic Flash May 9, 08
    Oh? And the 360 doesn't have the ability to play movies, music, download game patches and extra content and completely new games from their download service? I don't see why the 360 is on any less need of extra storage.

    ...and why did someone mark down Final Blade for saying a product should be better? o___O "Things should be good" isn't even an opinion you can reasonably disagree with.

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