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Intel Corporation Message Board

  • intel_fanboy intel_fanboy Dec 9, 2013 11:50 AM Flag

    XBox 360

    Paul Thurrott mentioned that back in 2003 he saw the first prototype of the XBox 360. It was on a rack the size of a refrigerator. They had a modeled prototype of the first white case. He couldn't believe that it would fit into the case. But it launched in 2005. The BOM was much higher than the selling price. Microsoft lost money on each console sold. To make matters worse after a while the units would overheat and a red ring of death would come up. Microsoft would pay to pick up the defective units, fix them, and ship them back.

    This was a losing proposition for Microsoft for years. The royalties for resulting game sales didn't make up for the fact that Microsoft was bleeding money. And then after a while they turned it around and started making over $1 billion a year in XBox revenues.

    Yes it's hard to draw a direct correlation between XBox and Intel's $1 billion payout. After all, XBox makes money on games and all Intel has is sales. My point is that sometimes you need to not be afraid to lose money upfront in order to make it back in the backend. The socket you help subsidize today in order to be priced competitively may not need it in the future if Intel gets it's economies of scale in line and can help fill out the SoC with in house technology.

 
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