So you were put in charge of making the 060 based amiga

[AJCopland]

Wait, how are you doing your accounting?  Sold at a loss after including all marketing expenses? or sold at a loss even before marketing $$ are taken into account?  You are not talking about the bare bones cost of manufacturing, right?

Yup, post _manufacture_ and before marketing. Nintendo are the only exception having always sold their hardware at a profit. Even though the GameCube sold less than the Xbox and PS2 they still made more money from it than either competitor.

This is very well known stuff with consoles I'm surprised it still surprises people! They sell the hardware at a loss as they make all of the money from peripherals and gated development.

We cannot buy hardware direct from Sony, Microsoft or Nintendo without being able to demonstrate that we're at least in talks with a publisher, have previously released games OR have developers onboard who have previously released games. It can be a real pain for a startup just getting dev' kits.

Then you pay tens of thousands of dollar to submit your game to them for TCR/TRC testing, which will usually fail the first time so you'll re-submit until it passes. You do this for each territory that you release in, eg: EU/US/Asia and for each console. Once you've passed all of this you send your gold master to them to duplicate and they send you the discs which you pay for of course then when you sell it, they get slice of the profit.

If you think that's profit-tastico you should see how much they make on the peripherals!

Andy

[AJCopland]

My Siamese System was available around then and showed the way, even running RTG over ethernet which was only 10mbit/sec it could outperform any Amiga graphics card, even having the Winblows OS getting in the way slowing things down.

Commodity plugin hardware support was the future, and that was on PCI only I am afraid. But as PCI I believe was basically Zorro enhanced and refined that is no biggy, ie auto config etc.

Commodore knew what to do, they were told by many engineers, they chose not to do it and perished because of it thinking they could compete with a games machine, fools.

Well dare I say it as I tried to get it done, 060 onto PCI Amiga card, plugged into cheap PC hardware with Siamese software and while AmigaOS was being ported to x86 use winblows as launch tool and driver system and get windows compatibility as well as Amiga and Mac.

Aargh those were the days, but we blew it, sorry. Still I am back for round two.

Steve

I always wanted one of those Siamese systems back when I'd see them advertised

Andy

[AJCopland]

Where are you getting the manufacturing costs of the various systems to assert that all, except Nintendo, cost more to make at the Chinese factory than the (wholesale) selling price?

Sometimes it's straight from the horses mouth, but often analysts and others will tear-down and simply tally up the amount that the components cost. Whilst big companies do have more leverage when it comes to negotiating manufacturing and sales they can never come below the minimum sale price of a part.

http://www.gamasutra.com/view/news/29167/Yoshida_After_Three_Years_PS3_Hardware_Breaking_Even.php

You'll notice a link in that article too a company called "iSuppli" they do this for a wide range of hardware and can get at the unit costs direct from manufacturers of motherboards, other pcbs, chips etc.

http://blastmagazine.com/2009/12/12/sony-losing-40-on-every-ps3-sold/

Quite often we're (I'm a games developer) simply told at conferences about how much each is costing and thus when they expect to break even.

I've picked the PS3 here since it's got the most abundant breakdown info due to the massive overhead induced by the blu-ray drive. However google and you'll find a lot more.

Andy

Missed one! http://news.cnet.com/PlayStation-3-component-prices-Why-so-high/2100-1043_3-6042226.html

[AJCopland]

Excerpt from above link:

"Selling a console at a loss is typical for Sony and Xbox house Microsoft. Console makers sell hardware below costs to establish an initial install base, then make money back after a time when economies of scale make hardware profitability possible."

The implication is that the console sales generally do become profitable in the long term, even without the hugely profitable software, so long as sales volume reaches expectations.

Yes on a long enough timeline most of the hardware does become mildly profitable. Not always though, the original Xbox never did due to nVidia refusing to reduce the cost of their chipset, it was a fantastic cash cow for them. It's been speculated that was the reason MS went to ATi for the Xbox360s chipset/GPU.

Besides which by the time console hardware finally becomes profitable it's in the end-stage of it's life and so selling a much smaller volume of units. If you've sold 10 million units at a $20 dollar loss, but at the end you manage to sell 1 million units at $20 profit, you still made a $180 million loss overall.

It's not a problem because that's just not the model that they chase.

You seem to be arguing that they don't do this even though MS, Sony, Sega (Saturn & Dreamcast) and even Atari (Jaguar) all acknowledge that this is exactly what they do. I am understanding right or are you just wanting to find out more about it?

Commodore never did this because they couldn't control the format (disc/CD), peripherals and development in the same way that companies do now. Nintendo have never done it because they've never seen the need and would prefer it if everything just printed it's own money like the gameboy does for them with every minor revision.

Andy

[AJCopland]

In general, that's not quite how economy of scale works.  A company might sell X units at a loss, then later negotiate 5X that volume at lower manufacturing cost per unit to make a profit on every unit for that larger volume.  I'm sure there are some exceptions.  Nonetheless, it is clear to all that the console sales are not where the major profit rests.

True, but my example was a little contrived to make the point that not matter how many they buy they still can't get below the cost price of the items themselves.

When it comes to peripherals it's an interesting situation as you occasionally get approached by manufacturers to support their, sometimes quite mad: pads, sticks or in our case inflatable-wireless-motion-sensing-motorbikes... I kid you not

Still they make for some awesome splitscreen racing fun