Microsoft plans to heavily subsidize its XBox 360 console in order to keep its launch price down to reasonable levels and possibly to trouble rival Sony, expected to have a problem keeping its PS3 price down to similar levels.
Major investment bank UBS reckons MS will subsidize 360 to the tune of USD 75 in order to achieve a launch price of USD 299. These estimates may be the result of complex calculations but most gamers had figured as much out since Microsoft's J. Allard had claimed that the console would launch for around USD 300; add to that the information released last week, by the Toronto Globe and Mail, that each 360 would cost MS USD 375 to make and feed the data to Big Blue, the print out should read USD 75.
The news is really not that remarkable as console manufacturers are known to subsidize their products at launch in order to convince consumers to buy them. The real money is made through sales of games, expected to become even more expensive for next-gen consoles.
Last time round Sony subsidized its PS2 at launch but had the flexibility to begin making money on the hardware later on in its production-cycle, as the company was making most of the hardware itself. Microsoft did not have the same options available with the original XBox and is still making a considerable loss on every unit sold. This time however, it is expected that MS will be able to begin making a profit on the XBox 360 fairly soon.
