Xbox 360 Costs Microsoft $715 to Make, Profitable by July

Each Xbox 360 console costs $715 to make, and Microsoft are losing as much as $300 per sale, according to an IBM insider speaking to GamersHell:

“A high ranking friend at IBM, one that worked on the Xbox 360 chip design, tipped us regarding the real expenses involved in manufacturing the Xbox 360, and when we mentioned the $126 Microsoft loss, he said:

‘$126? It costs Microsoft approximately $715 make, the manufacturing costs are still too high, another reason why they’re producing relatively small quantities, Microsoft can take it though.’ “

Microsoft executives have promised that the Xbox business would become profitable by FY’07, which begins in July 2006, reports Directions on Microsoft.

Directions analysts predict that Microsoft’s strategy for 2006 will include justifying the Xbox 360’s current high price (or lowering it to put price pressure on Sony and its upcoming PS3 console), delivering the “must have” game title that was missing at launch, and proving that early shortages and glitches were temporary and solvable problems.