360 manufacturing costs drop below retail price

The price of manufacturing the hard disc drive enabled Xbox 360 has now dropped low enough that Microsoft could be breaking even, according to a report from technology analyst iSuppli.

After assessing that the Sony could be losing as much as US $300 on the 20GB PlayStation 3, iSuppli have calculated that Micorosft has reached the point where lower manufacturing costs total US $75 less than the retail price.

"The HDD-equipped Xbox 360 has a manufacturing and materials total of US $323.30, based on updated estimate using costs in the fourth quarter of 2006," said the report. "This total is US $75.70 less than the US $399 suggested retail price of the Xbox 360."

As the estimates only take into account the component costs, it does not consider other factors such as retail margins, packaging and distribution costs. Also, the Core Xbox 360 is still more expensive to manufacture, with a retail cost in North America of US $299.

Breaking down individual components, iSuppli lists costs for the Xbox 360 motherboard (US $204), optical drive (US $19.45), hard disc drive (US $43), power supply (US $25.50), case (US $20.50) and only US $6.10 in manufacturing costs.