Prior to the launch of Kinect, Microsoft said that they would be making a profit on each camera sold. Some snoopy people over at UBM Tech Insights have decided to put that claim to the test. They got hold of a Kinect unit and ripped it to pieces.
By analysing and tracing each component of the Kinect camera, Tech Insights was able to put together a hardware costing for a single unit. It’s quite a lot less than us as end-users wind up paying. Are you surprised? You shouldn’t be.
According to UBM Tech Insights, each Kinect camera costs Microsoft $56 in hardware. That works out to less than R500.00. The most expensive component is a “reference system†which is manufactured by an Israeli company called PrimeSense. That component alone sets Microsoft back $17.
Of course, this is just for the hardware. You’d still need to factor in the labour costs for assembly, transport to suppliers, marketing and royalty fees to third-party hardware manufacturers, of which there are surely quite a few hidden amongst the various components that make up the device.
Source: Kotaku
Last Updated: November 12, 2010
Bobby Kotick for Dummies
November 12, 2010 at 11:32
So there’s really no reason for them, not to sell Kinect between R999 – R1200
Philip
November 12, 2010 at 11:41
If people are still going to buy it at a higher price point, why would they drop it?
RSA-Ace
November 12, 2010 at 11:49
So they sell them for $150 with a game. So lets call it $75 after hardware and software costs. Easily another $25 per unit for R&D, transport, royalty and labour (likely much higher knowing R&D costs).
So we have $50 for marketing and ‘profit’ made on each Kinect. I’ll assume they did spend $500 million just on marketing. So here is some maths on how many Kinect’s need to get sold just to pay for marketing (if my assumptions are correct). I’ll also assume they MS make $20 per game sold. Remember these are extra games – Kinect comes with a game already.
Kinect + 0 Games = 10 million consoles.
Kinect + 1 Game = 7.1 million consoles.
Kinect + 2 Games = 5.5 million consoles.
Kinect + 4 Games = 3.9 million consoles.
So MS need to sell a lot of consoles just to become profitable. The VGChartz supposed Kinect numbers show that most people are buying 1 extra game but we’ll use 2 just to even things out.
I’m going to say that they will start seeing profit in Q3 2011.
Bobby Kotick for Dummies
November 12, 2010 at 11:51
I’ve kind of factored in licensing, labour, transport costs, R&D etc (R999 – R1200), but there’s no way all of that would amount to nearly 60% more of the hardware cost, but at the end of the day, Microsoft has always pushed their hardware at inflated prices (almost taking a page from Apple’s book), so we really shouldn’t have been surprised by this.
It just means there’s no way in HELL I’m buying Kinect.
al360
November 12, 2010 at 12:00
kinnect is a rip off and a scandelous way of ripping off the family man/women who just wants to do something for the family what a way to rip that idea off MS
i will not be supporting MS money grubbing tendencies no more ! :ninja:
Fox1
November 12, 2010 at 12:00
Price must have been kept high due to stock shortages and also because it’s the one and only Kinect :dizzy:
Syth
November 12, 2010 at 12:11
True, and more so because most people are gullible and stupid and would actually buy overpriced stuff just tell people they won it. (I’m not talking about kinect spesifically here, in general.)
But money is the goal and MS are succeeding.
Fred
November 12, 2010 at 12:19
You sell at the price people are willing to pay.
Jeebers
November 12, 2010 at 12:56
M$ charge what they do, because their loyal fanboys will continue to support them. They have been shafting the consumer for years with high prices, pathetic quality hardware, no recognition for locals, charging to play multiplayer etc, yet the loyal drones keep going back for another ass raping, which M$ is happy to give. Suckers, the “hole” lot of them.
razer
November 12, 2010 at 13:16
I agree that Microsoft products are always generally expensive but you dont have to be a so called “fanboy” to support them. I like cool tech and kinect is very advanced and has so many more possible applications besides games.Let me ask you something Jeebers, did you comment on this thread using a pc? What OS is that pc running? If XP, doesn’t that make you a M$ fanboy as well?
talk2jad
November 12, 2010 at 13:17
We South Africans have this mentality that as a customer we should get everything as cheap as possible and the profit making should be at an absolute minimum, unless of course if I am the person making the profit then I rape each one of my customers for as much as I can. We are a fickle and hypocritical nation to say the least.
Bobby Kotick for Dummies
November 12, 2010 at 13:49
It’s called being money smart (didn’t your parents teach you how to save or manage your money?)!
If you think that you should pay more for an item, then quite frankly that’s your prerogative, but it’s really a sign of a stupid consumer. :whistle: #merelysaying
Philip
November 12, 2010 at 14:15
And Microsoft loves them some stupid consumers.
If I ever buy Kinect, it won’t be until it drops substantially in price, and then it’s still “if”.
talk2jad
November 12, 2010 at 15:25
There is no need to be rude or throw sarcastic comments 🙁
Bobby Kotick for Dummies
November 12, 2010 at 16:00
I’m sorry dude. 🙁 Didn’t mean to come down so hard on you.
Macethy
November 12, 2010 at 16:53
I’m sorry but HOW is this news? Isn’t the point of running a company (which MS is last time I checked), to make a profit? I heard it costs about R1.30 to produce a can of coke until the packaging stage and we fork out around R6 at least for it. Some how we as gamers seem to think that we are entitled to lower prices on games / hardware / accessories / etc, for some strange reason. Wake up and realize that MS and Sony and Nintendo have to pay their employees and creditors and shareholders at the end of the day and still have money left over to continue running in the future and releasing new products (like Kinect…) and the only way they can do that is by turning a profit! If you don’t like the price point, don’t buy it, owning Kinect or Black Ops at release isn’t a necessity… RANT OVER
DarthPenguin
November 12, 2010 at 17:09
The rest of you just got served 😛
Razer0
November 12, 2010 at 18:53
Nicely said Macethy, if any one of us here designed a product that we could sell at a high price,why would we wanna sell it at cost? When it comes to games,hardware,accessories,etc buy it if you want or have a coke and a smile and shut the fuck up!!!
M@GE
November 12, 2010 at 21:11
…….well on the bright side, the Kinect games are way cheaper than the usual price of an Xbox 360 game. I think I would rather have an over-priced piece of hardware and the cheaper games than a cheap piece of hardware and more expensive games. Cause at the end of the day you’ll have cheap Kinect games for years to come. :sideways:
Nick de Bruyne
November 12, 2010 at 21:19
A R6 Coke. 😎
Gavin Mannion
November 12, 2010 at 21:45
Your point is valid but in general the hardware manufacturers sell new devices at a loss and make up that difference on software royalties.
So if Microsoft had followed the standard business pattern we would have been seeing a Kinect for R999.
That’s why it’s news 😉
M@GE
November 12, 2010 at 23:08
lolz and I get your point too Gavin. I’m just trying to be positive and think positive: it helps fade away all the negativity in these negative times 😉
M@GE
November 12, 2010 at 23:14
:blink: Oh shit lolz…..today is one of my stupid-idiotic-“duh” days. I thought you directed that comment towards me Gavin……I am officially the “Idiot Of The Day”…..Now where’s my prize? :whistle: