3 ms·

This is untrue. The XBox started out at a loss as a specific strategy by Microsoft to break into a market that was controlled by multiple established rivals. Ot

This is untrue. The XBox started out at a loss as a specific strategy by Microsoft to break into a market that was controlled by multiple established rivals. Other than that, consoles are sold at a profit. That is, the revenue Nintendo gets from sale of a Switch is greater than the marginal cost of its manufacture. What you may be thinking of is that the consoles are not the main source of profit. And that the profits from consoles may take some time to make up for the expenses of developing and manufacturing those consoles.

deleted 6y ago
[deleted]
mthoms 6y ago
Companies generally take huge losses at the beginning of the cycle and a very modest profit towards the end. Overall, it's probably a wash. I think the statement that consoles are sold at a loss is generally/mostly true. [0] >And that the profits from consoles may take some time to make up for the expenses of developing and manufacturing those consoles. Yup, and during which time, they sell at a huge loss.[1] You're right that Nintendo tries to buck this trend, but they also realize it's a delicate balancing act.[2] [0] https://www.businessinsider.com/xbox-one-x-price-explanation-phil-spencer-e3-2017-6 https://www.businessinsider.com/xbox-one-x-price-explanation... [1] https://www.fool.com/investing/2019/06/18/sony-microsoft-game-console-big-loss-leader.aspx https://www.fool.com/investing/2019/06/18/sony-microsoft-gam... [2] https://venturebeat.com/2016/10/26/nintendo-wont-sell-switch-at-a-loss-plans-to-ship-2-million-units-in-march/ https://venturebeat.com/2016/10/26/nintendo-wont-sell-switch...
- thedufer 6y ago
  "selling at a loss" generally means that the margin is negative, that is the unit price to manufacture (and ship, etc) is higher than the price the consumer pays. Your alternative definition applies to pretty much everything with R&D costs. The first unit sold is pretty much guaranteed to not make up for R&D costs, but for some n the margin made on the nth unit covers it, and the seller finally starts turning a profit. I think what your citations are actually saying is that even the last unit sold does not cover R&D costs, and it has to be made up in other divisions (such as games) in order for the whole venture to turn a profit. But each individual unit is still marginally profitable - if they could sell enough of them (perhaps far more than the size of their market) they would eventually turn a profit on the console itself.
  - mthoms 6y ago
    I'm failing to see how what you wrote contradicts what I wrote, where I said anything about R&D, or what "alternative definition" I allegedly made up.
    - thedufer 6y ago
      > Companies generally take huge losses at the beginning of the cycle and a very modest profit towards the end. This sounds like a claim about cumulative profits, no? Maybe you're instead suggesting that either prices rise or manufacturing costs fall over the lifetime of a console?

deleted 6y ago

[deleted]

mthoms 6y ago

Companies generally take huge losses at the beginning of the cycle and a very modest profit towards the end. Overall, it's probably a wash. I think the statement that consoles are sold at a loss is generally/mostly true. [0] >And that the profits from consoles may take some time to make up for the expenses of developing and manufacturing those consoles. Yup, and during which time, they sell at a huge loss.[1] You're right that Nintendo tries to buck this trend, but they also realize it's a delicate balancing act.[2] [0] https://www.businessinsider.com/xbox-one-x-price-explanation-phil-spencer-e3-2017-6 https://www.businessinsider.com/xbox-one-x-price-explanation... [1] https://www.fool.com/investing/2019/06/18/sony-microsoft-game-console-big-loss-leader.aspx https://www.fool.com/investing/2019/06/18/sony-microsoft-gam... [2] https://venturebeat.com/2016/10/26/nintendo-wont-sell-switch-at-a-loss-plans-to-ship-2-million-units-in-march/ https://venturebeat.com/2016/10/26/nintendo-wont-sell-switch...

thedufer 6y ago
"selling at a loss" generally means that the margin is negative, that is the unit price to manufacture (and ship, etc) is higher than the price the consumer pays. Your alternative definition applies to pretty much everything with R&D costs. The first unit sold is pretty much guaranteed to not make up for R&D costs, but for some n the margin made on the nth unit covers it, and the seller finally starts turning a profit. I think what your citations are actually saying is that even the last unit sold does not cover R&D costs, and it has to be made up in other divisions (such as games) in order for the whole venture to turn a profit. But each individual unit is still marginally profitable - if they could sell enough of them (perhaps far more than the size of their market) they would eventually turn a profit on the console itself.
- mthoms 6y ago
  I'm failing to see how what you wrote contradicts what I wrote, where I said anything about R&D, or what "alternative definition" I allegedly made up.
  - thedufer 6y ago
    > Companies generally take huge losses at the beginning of the cycle and a very modest profit towards the end. This sounds like a claim about cumulative profits, no? Maybe you're instead suggesting that either prices rise or manufacturing costs fall over the lifetime of a console?