Question: How is xbox360 Xenon processor so cheap?

VictimOfScience

VictimOfScience

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I recently read that "the custom-built triple-core PowerPC chip from IBM accounts for 20 percent of the materials cost at a price of $106 USD." Source.

My question is: how can it be so cheap and yet so advanced and powerful when top of the line CPUs for PCs like the FX-57 cost over $1000 USD? Can a hardware expert explain this to me please? :imu:
 
Mircosoft is loosing money on each sale of a Xbox 360.
 
I know, but the total manufacturing cost for the premium version is only $525 total (see same source in my post above), so that means they are losing $126 on each premium console sold which still doesn't account for the amazingly powerful and strangely affordable hardware. My question still stands....
 
Bill Gates probably gave IBM's founder a lap dance.
 
You are trying to compare Retail price vs manufacturing price. Ask Intel or AMD how much it costs them to make those CPUs and it's really low.
 
90nm process soon 65nm
1MB L2 cache
Simple IBM PowerPC cores
Much slower than even mainstream desktop processors in single threaded game code
No Out-of-Order support

That should answer your question. Just because it is a CPU doesnt mean it is the same as a desktop CPU. There are large differences. The lack of OoO support really cuts down on die sizes. A small cache also helps.
 
Asus said:
You are trying to compare Retail price vs manufacturing price. Ask Intel or AMD how much it costs them to make those CPUs and it's really low.
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DrDevin said:
90nm process soon 65nm
1MB L2 cache
Simple IBM PowerPC cores
Much slower than even mainstream desktop processors in single threaded game code
No Out-of-Order support

That should answer your question. Just because it is a CPU doesnt mean it is the same as a desktop CPU. There are large differences. The lack of OoO support really cuts down on die sizes. A small cache also helps.
Click to expand...

I think your two answers combined help me think of this in the right terms. Thank you both for the quick and informative responses. :cheers:

Of course, anyone else with thoughts on this is more than welcome to chime-in too. :thumbs:
 
It's simple economics actually. They lose money on the sale of each X-box 360, but make up the difference every time you buy a new game. Kind of like getting a "free cell phone". Sure it's free, but you have to keep buying the service for it.
 
No NJspeed, they don't lose money. It doesn't cost a company like AMD 1000$ to make an Athlon64 X-2 chip, it probably costs them around 100$, but they want more money. It's the same with the Xbox chip, they won't make as much moneyas they could, but they also want to make it affordable so more people will buy it. They probably average out with the same profits.
 
part of the cost for computer cpu's is the cost in developing them and what's next. The cell processor is a fairly static technology (as any console processor is) so microsoft is losing money right now, but as asus said they're really cheap to actually produce so microsoft will be gaining money in the long run.

that's the plan at least.
 
No NJspeed, they don't lose money. It doesn't cost a company like AMD 1000$ to make an Athlon64 X-2 chip, it probably costs them around 100$, but they want more money. It's the same with the Xbox chip, they won't make as much moneyas they could, but they also want to make it affordable so more people will buy it. They probably average out with the same profits.
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Kind of wrong actually but kind of right.
Sure it only costs Amd a $100 for each chip, but then add in all the research that goes into them, the limited amount of buyers for them, and etc..
In the end you find that if they sold them all for $100 they just can't make enough profit off of them.
Because they may have put $10,000,000 into funding the damn company, then funding the research, putting ads out, having other companies use AMD processors, expanding your company, hiring more people to expand, buying a new manufacturing building, etc... etc.. and etc...

With a Console your assured that your gonna have millions buying your system. With a Pc for all you know it may only lead up to 100,000 to a million.

The same goes for Graphic Cards and motherboards. Technically if there were tons more avid Pc Gamers prices would go down quite a bit. If AMD could be assured that 20 - 30 million would buy there processor within the first few months they would have that item manufactured the hell out of and sold to those people for a relatively cheap price.

But that would actually be almost bad for AMD right now. Intel is much much bigger than AMD and can push alot more chips out than AMD much much faster. Thus Intel would have a significant advantage, getting more chips out faster.

Don't you just love and hate competitive business?
 
Qonfused said:
Mircosoft is loosing money on each sale of a Xbox 360.
Click to expand...

Why does a company like microsoft do this? I mean, I can understand the desire to get a new console out there to beat everybody... but isnt the point of it to gain money?

I honestly cant believe microsoft does it out of the goodness of their heart. Why sell so many, when you're losing so much?
 
Put simply, MS owns (or part-owns) the IP for the chip so they don't have license fees to worry about. Secondly, they are buying a lot of them at just over cost, practically a four finger discount.
 
Why does a company like microsoft do this? I mean, I can understand the desire to get a new console out there to beat everybody... but isnt the point of it to gain money?
Click to expand...

More basic economics... If they were to sell it at about $550, they'd make a little profit off of each one, but very few will buy it, they'd sell much less and make a lot less money. They're selling it at a loss of about $120 because the point is to gain money...

I honestly cant believe microsoft does it out of the goodness of their heart. Why sell so many, when you're losing so much?
Click to expand...

They charge less for the console, and make profit once the production costs go down for the console until they're lower then their prices. They also make money by charging extra for the games and peripherals, and from liscensing fees.
 
Give them the razor, then fleece them on the blades.
 
MS also wants to break into the console market - a well established ground. Taking a hit is a part of the price, and it's paid off. You can rest assured that MS will continue to expand it's console division, and eventually make pure profit on its consoles.
 
the xbox360 is a 'loss leading' product like every other console out there when it comes out. eventually as production costs come down they will break even and probably make money on the console itself. but that doesnt matter, they may lose $120 on the console but like its been said, you have to buy games, youll want an extra control pad, you might buy a memory card etc. its just like retail PC sales, they make 1-2% on the hardware profit and then charge you $40 for antivirus.

on another note, has anybody seen that xbox360 is being sold for the equivilant of £190 in japan?
 
bodhi said:
on another note, has anybody seen that xbox360 is being sold for the equivilant of £190 in japan?
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:eek:

what about availability though ?
 
3ssence said:
:eek:

what about availability though ?
Click to expand...

not sure but i heard that they were aiming to sell one million in japan by summer 2006 so they will probably have less than US for launch but more than UK. i reckon they'll have half a million for launch in japan. the reason theyre selling it so cheap (£190 for the harddrive/wireless control bundle) is because if they can tempt more people to buy one then theyll be able to get more of the japanese developers to make some games for the system. very few of the big jap developers botherd with xbox1. apparently theyve still only sold 500k xbox1's in japan
 
Why does a company like microsoft do this? I mean, I can understand the desire to get a new console out there to beat everybody... but isnt the point of it to gain money?

I honestly cant believe microsoft does it out of the goodness of their heart. Why sell so many, when you're losing so much?
Click to expand...
It has nothing to do with the goodness out of their hearts.
They do this so more people buy it. Then they make money off the games. They charge $10 for every single game that ships. So if 10,000,000 3rd party game ships out all across the world, Microsoft makes $100,000,000.
If a in-house game like Halo 3 would go out and sell 10,000,000 not only does Microsoft own Bungie, but is also the publisher they basically take about $40 of that $50, or $50 of that $60. and they make $500,000,000 million off of it but this money also goes for shipping, funding bungie, but stills adds to alot either way.

Obviously not every game is going to sell 10,000,000 copies but im just trying to give you the idea behind it all. When you have all these games it really adds up.
 
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