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    Microsoft says it never made a profit from selling an Xbox console

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    Source: Xbox


    A Microsoft never made a profit from the sale of a consul Xbox , the company confirmed in court on Wednesday.

    The razor-and-blade business model has been the norm for console makers, who traditionally sell devices at a loss but make money from the software and services available for the hardware.

    However, the ongoing test of epic Games vs Apple continues to draw the attention of the general public to the kind of sensitive information that companies would prefer to keep secret.

    Xbox's vice president of business development, Lori Wright, who is a third witness in the case, was asked by Epic attorney Wes Earnhardt “how much margin does Microsoft make from selling Xbox consoles?”

    We do not. We sell the consoles at a loss,” she replied, according to the Protocol.

    Questioned if the Microsoft has already made a profit from the sale of an Xbox device, she said “no”.

    Source: Xbox
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    “Non-profit hardware certainly played a bigger role in the late 90s and early 2000s (oh and in the era of PS3 lol),” tweeted the senior analyst at Niko Partners Daniel Ahmad in response to the testimony of Wright.

    “Both the PS5 as for X/S Series are being sold at a loss now, but are likely to become profitable in the future.

    "The PS4 was probably the first console of the Sony to change the above concept a little bit”, he suggested.

    “While Sony aggressively cut the price of the PS2, for example, to $99, the PS4 maintained a $299 price point for several years and was profitable.”

    Ahmad also called the Nintendo of “something atypical, since” Switch was built to be profitable as quickly as possible.”

    Same Microsoft document has a breakdown of hardware revenue / profit estimates for Sony and Nintendo.

    Hardware generating a loss for Sony, but profit for Nintendo.

    — Daniel Ahmad (@ZhugeEX) May 5, 2021

    For example.

    The same document from Microsoft estimates that Sony had a profit of $4.1bn on software and services.

    But it had a loss of ~$1.7bn from hardware.

    So it's overall profit was $2.3bn

    — Daniel Ahmad (@ZhugeEX) May 5, 2021

    The Epic vs Apple test led to a series of revelations this week, generating headlines.

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