Xbox One sales a break even deal for Microsoft with possible low margin profits
While most consoles are typically sold for a loss, save for Nintendo, Xbox chief marketing officer Yusuf Mehdi has revealed that Microsoft will at least break even, with possibility of a low profit margin, for each Xbox One system sold.
Speaking at the Citi Global Technology Conference (via Games Industry Biz), Mehdi told the crowed that "the strategy will continue which is that we're looking to break even or low margin at worst [on Xbox One] and then make money selling additional games, the Xbox LIVE service and other capabilities on top.
"And as we can cost-reduce our box as we've done with 360, we'll do that to continue to price reduce and get even more competitive with our offerin," he added.
The realization that Microsoft could make a profit on Xbox One likely won't sit well with consumers who are already frustrated over the system's $499 price, $100 more than the PS4. It was believed that the extra $100 was a result of Microsoft bundling the Kinect with each console. There are hopes Microsoft will introduce a cheaper Kinect-less SKU now that the Xbox One no longer requires the Kinect, but Microsoft seemingly has no plans to do so.
Although Microsoft is not losing any money on each Xbox One sold, one has to wonder how much it's costing them in pre-orders. Microsoft may not be selling at a loss, but if consumers are choosing the PS4 over the Xbox One because of affordability then saving a few extra bucks (or a few million bucks) doesn't seem worth it. Even if Microsoft lessened the console price by just a little, I'm sure it would seem more appealing than the $499 price it currently has.