Costs of making 360s going up?

Some things are looking up, like sales. And costs.No one really knows what to make of it. In their 1st quarter 2007 earnings report, Microsoft mentions a “$268 million increase in cost of revenue” driven, in part, by “higher Xbox 360 unit costs.” Says TG Daily,

Especially the higher Xbox 360 unit cost is surprising, as the business model of game consoles tends to be at least partially based on decreasing unit costs over the lifetime of a device.

Surprised, too, were Xboxic and Kotaku, both of whom report on this bitty. Kotaku speculated something bordering on a bit scathing. “(The Kotaku poster thinks) this was a QA decision: earlier/cheaper consoles may have been easier on the bottom line, but weren’t exactly breaking records for reliability.” Xboxic picked up on the line and judged it a “reasonable assumption.”

It’s not really fair that, absent all the facts we need to know, we should jump to conclusions here as well. Although both Kotaku and Xboxic are saying that in the face of this, a price drop for the 360 seems less likely now. Jives with what Microsoft execs have been saying, anyway. It’s the Quality Assurance speculation from Kotaku that would have us worried, though, but our Xbox 360 seems fine for now.

Some things are looking up, like sales. And costs.No one really knows what to make of it. In their 1st quarter 2007 earnings report, Microsoft mentions a “$268 million increase in cost of revenue” driven, in part, by “higher Xbox 360 unit costs.” Says TG Daily,

Especially the higher Xbox 360 unit cost is surprising, as the business model of game consoles tends to be at least partially based on decreasing unit costs over the lifetime of a device.

Surprised, too, were Xboxic and Kotaku, both of whom report on this bitty. Kotaku speculated something bordering on a bit scathing. “(The Kotaku poster thinks) this was a QA decision: earlier/cheaper consoles may have been easier on the bottom line, but weren’t exactly breaking records for reliability.” Xboxic picked up on the line and judged it a “reasonable assumption.”

It’s not really fair that, absent all the facts we need to know, we should jump to conclusions here as well. Although both Kotaku and Xboxic are saying that in the face of this, a price drop for the 360 seems less likely now. Jives with what Microsoft execs have been saying, anyway. It’s the Quality Assurance speculation from Kotaku that would have us worried, though, but our Xbox 360 seems fine for now.

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