After receiving positive reviews upon its release this week, Microsoft's Xbox 360 Kinect has been stripped naked and assessed for manufacture costs. It turns out that the materials that make up the motion-powered peripheral amount to just £35 - considerably less than its £130 RRP. Although this figure doesn't reflect other …
I watched the video teardown the other day
I watched the video teardown on ifixit the other day - I like the little comment about the fan being there because of past xbox overheating problems maybe!
When, oops, I mean IF, the Kinect goes wrong, I wonder if we will get the red finger of death this time? I don't know which is more painful, a red ring or a red finger!
After receiving positive reviews upon its release this week
Only here. Everywhere else universally slates it.
With even Xbox Loving Ars Technica call it broken and predicting Microsoft will go the Move route once the hype dies down and reality comes crashing home.
"We're going to come out and say it: Microsoft is going to release a Move-style controller for the Kinect within a year or so. Both gamers and developers are going to be frustrated by all the things the hardware can't do, and they'll demand a way to interact with games using at least one or two buttons. It's not a coincidence that so many games at launch are in the same few genres, you know."
Re: Only here.
Really? I'm not a gamer but the few reviews I've read (mostly mainstream press) have all been glowing. Might I suggest that it is the hard-core gaming and tech contingent who aren't that chuffed with the Kinect - a product clearly not aimed at them? The Kinect - like the Wii before it - is aimed at families and casual gamers.
I followed that link.
I read that as "It works quite well, the tech's sound, but it *really* needs better games"* as written by a traditional, couch-potato gamer who was *seriously* hacked off at being forced to take some actual physical exercise......
*Or much the same as was said here in fact.
Well you should read a few more reviews. Most praise the hardware but then damn it by mentioning lag, spotty voice / motion detection, room clearance, price, more lag, simplistic games, crap games etc. That's not to say it isn't fun at least initially, but where does the thing go from here? I expect innovative uses of the tech will be few and far between 90%+ of the material will be shovelware dance, fitness & party titles.
>With even Xbox Loving Ars Technica call it broken and predicting Microsoft will go the Move route once the hype dies down and reality comes crashing home.
Move style beacons would be pointless since it does object recognition out of the box anyway. Ars Technica are basically a pro-Mac site aren't they? Can'r see any evidence they love the Xbox from a quick look.
RE: Casual gamers
Casual gamers and families play on the wii.
I'd say 90% of Xbox 360 owners would describe themselves as "hardcore gamers" Mainly because 90% of all the XBox 360s are owned by 13 - 30 yr old males.
Well, maybe they will bring out a controller, but that doesn't stop the Kinect being a truly stonking piece of technology. You will always need a new input system for certain ideas. Ever played Guitar Hero without the guitar?
The controller will appear if and when the games need it, but Microsoft's gambling on speech recognition as the controller killer.
"Or maybe just the Sony fanboys who are still crying about the fact Move flopped and no one even noticed that it was released,"
Actually Move did quite well considering Sony didn't drop half a BILLION marketing the thing. Even so I suspect both techs are ultimately niche products. Take whatever the installed userbase is for either platform is and divide by a whole number larger than 4. That's likely to be the largest install base either system will enjoy.
Freetards of the world rise up!
"the materials that make up the motion-powered peripheral amount to just £35 - considerably less than its £130 RRP".
Is this a new front for Freetards, first a complete rejection of charging for products and now all profit is evil?
As worthy as that is in my book in the philosophical sense it's not the societal nor commercial model we have today. As it is,the mark-up is inline with practices I've seen and not as bad as other mark-ups often are when all those in the chain need to dip into the pie.
And shouldn't the article have gone further and started from a basis of how much the components would have cost if the manufacturers of those were making no profit? Heck, it all comes out the ground so why not go for a shocking, "£130 RRP for something that is free"?
I'm at a loss as to what the non-story is beyond noting that there may be scope to drop prices in the future.
Yes I see.
Please, *please*, good people, I am in haste! WHO lives in that castle?
What's the story?
I think the £35 thing is interesting because they could have added higher resolution to the device and still made it affordable especially if they hadn't spent $650 Million on hyping the device up beyond its capabilities.
It's not because game designers lack imagination that all the games released so far either have you standing on a moving platform ducking, jumping and leaning left or right or are the type of game where you have to put limb A into position B.
It's because it can't do much more, and why is that? £35, that's why.
@AC What's the story...
Higher resolution would require much more processing power and data down the USB, it's likely that it would be an exponential price increase for a linear resolution increase. That is if the USB could handle the extra bandwidth requirement.
Everything's the same
I saw a demo of the Rainbow cleaning system last night. $2500 for a vacuum that uses water as a filter, plus another $800 for the (mostly plastic) attachments. It's nothing more than a halfway decent brush-less motor spinning an impeller that draws air into the system at high speed while the impeller sprays water through the path, causing dirt to get stuck in the water and collect in a tank. Its 1930s technology (seriously, that's when the original patent was filed). I could build one for $400 in parts if i had access to a vacuum mold and plastics. They probably have $250-300 in total costs sunk into each unit they're selling for over $3K total package.
They also has a "mini" version that was an air filter. Cheap clear plastic bowl, a cheap low volt motor (think 200mm CPU fan) with a plastic impeller hung below it above the water in the bowl, and a very low power fish tank pump to spray water on the impeller, and I could make that thing. Maybe $25 in parts, at retail, and they wanted $150 for it.
>It's because it can't do much more..
Its already doing more, look at Dance Central or Fighters Uncaged amongst other release titles - you haven't a clue what you're talking about.
RE: you don't have a clue what you are talking about
LOL. When you've finished being wooed by the hype and have managed to engage your brain, have a think about the game mechanics behind dance central and the fight.
Can't be bothered? OK let me help.
Dance central = move your limbs into certain positions to get points. You actually follow the character on screen, isn't it supposed to be the other way around?
The Fight = wii boxing but better as it tracks you head as well, hardly revolutionary. Available on PS3 as well, apparently works just as well. Personally I'd just buy a punch bag, punching into thin air for long periods is not good for your joints.
These say it all really.
Reading the article it doesn't seem to suggest that making profit is a bad thing, I don't think anyone is seriously saying that nobody should be rewarded for adding value to raw materials, so you appear to be protesting an argument that doesn't exist.
This is a story as:
1) This is a site for geeks - this is an interesting story.
2) Many people presumed Microsoft were selling these at a loss, hoping to claw back money with sales of more games - this is obviously not the case.
I don't own an xbox, but still have an interest in the technology, and like information from 'behind the scenes' rather than just polished PR and reviews from mainstream journos who like the flashy lights. I guess you and I differ in this, that is why I read the register, why do you?
Re: The Commenter formally known as Matt
Thanks for stating that so well - saves me some typing as I was thinking the same thing. Bunch of Don Quixotes riding around here fighting strawmen (which might as well be windmills right?).
@ 35 quid
In the style of Nelson Muntz
Is hardware all that matters
We all know by now that the 'magic' in Kinect lies in the software. Hardware cost just isn't the right metric for cost calculation these days what with east asian companies ever striving to lower their price compared to the competitors.
That said, 95 is still a huge profit margin even after the other costs are factored in, but I for one am glad that kinect is not from Apple. I wouldn't want to spend 200+ quid toy only to buy games downloaded from iTunes that St. Steve has deemed fit for us.
Don't forget there is VAT on the £130 which accounts for just under £20 and you've got a price difference of £75 and not £95.
Shipping for a 40ft container with taxes and all the trimmings, runs in at about $3,000 but I imagine you could squeeze the best part of 5k into one of those so the unit cost is negliglble, add on Import Duty, assembly, and the mamoth marketing pot Microsoft are throwing at the thing and I doubt they're turning over much of a profit on the hardware.
The small matter of developing the thing in the first place...
And not forgetting that the retailer takes a big chunk of the pie too, their profit is anything from 10-50% of the final price of any item.
You could make the price hike larger by just looking at the value of sand for the silicon and oil for the plastics, etc. You'd probably get down to a quid or two.
50% Retailer markup?
lol oh wow... There have been plenty of absolutely ridiculous comments in this thread but you sir win the prize!
Gadget take apart and repair specialist also
--> Gadget take apart and repair specialist *iFixit* also...
...an iPhone costs about $200 in components, yet, in blighty, costs upto £600 ($800ish)
Ooh look, a ratio rather similar to the costs of the Kinect.
It seems that labour, marketting, r'n'd, distribution (inc import fees) etc., cost proportionately the same across the tech industry
Sorry to have to buy into an irritating meme, but this is news, how?
And your point is????
£130 RRP and £35 to build?
Welcome to the world of consumer electronics! I'm not saying this price difference is justifiable or not, but it's not at all unusual.
Do you REALLY think your shiny new TV coosts 700 quid to make? Or (my personal favourite) that Blu-Ray disc really costs three times that of the DVD version to press?
Of course not, but that's business for you. You don't have to buy it. And in the case of the Blu-Ray discs, even though I have a Blu-Ray player, I don't.
lol. BR disk has almost the exact same manufacturing process. A blank disk is far more complicated than a factory pressed disk, and more expensive to make, and I can buy a 100 pack of DVDs for under $30 easy. I've seen them as cheap as $).10 a disk. There's no complex technology in one vs the other, but BR blanks are $30 each, and DVD are a fraction of a dollar. The tech is in the DRIVE (aka the lasing system), but the disk is just some layering of some materials, nothing ridiculously special.
Its the licensing that you pay for, not the thing itself. Maybe MS puts $25-30 of parts in it, but assuming they say 1 million units (generous given sales thus far), they put what, $250m in development into it? They'll be loosing money if they don;t move 3m units by end 2011.
Back to disk media, I can understand why a movie costs (licensing of content), but I don't understand why a blank costs more than a licensed disk, or 50x the price of a very, very similar technology.
I know once you've accounted for import duty and VAT you wonder why you bother. I import various items from China at around 15GBP each (including the delivery cost: I order bulk tho ;) ), but by the time I've added on the import duty, VAT and Paypal/Credit card fees, the cost is more like 40GBP+shipping to the customer :(
And your point is?
So the components cost £35 and it retails for £130. And your point is what exactly? Take your £35, go out and buy the components and there you are you've got your Kinect for a massive saving. OK, there's the small point of assembling it (and knowing HOW to assemble it), and then there's the software that is what this device is really about but hey - it wouldn't make a good headline then would it?
I'm no fan of capitalism, least of all when it comes to massive international corporations like Microsoft, Apple, etc. but get real eh?
Not just consumer devices..
You're run of of the mill £100,000 super car has a few hundred quids worth of materials in it. It's how you design and put it together that matters.
Cost of production vs. R&D
I dont get it
Why are you all ragin so hard about the article? Ms are turning a profit on it. good for them. they need to recoup the astronomical sum they spent pushing it.
as for everything else, Its interesting that the base hardware is only 35 quid. at launch is already has problems with image and control resolution, and with hardware this basic I dont anticipate some sort of 'hotfix' to suddenly make it magical and win.
I understand that MS needed to corner the market otherwise Sony and nintendo were essentially going to be unassailable on the "jump around" gamers front, but I think they pitched the marketing way too high for the capabilities of the hardware; but hey, maybe they'll launch uprated hardware in a years time, after getting people hooked into a line of titles they like? much like nintendo did with the improved wiimotion/wiimote thingies.
thats assuming decent titles are made for it; you can have the nicest hardwar ever, but if nobody makes you any nice games... well, then its the Atari jaguar all over again, isnt it?
The second one costs £35
The first one is a little bit more expensive.
Is this the Sum?
Headlines like that really get my goat. The only thing they do is whip up anger in those who don't understand business.
How much do the coffee beans in you coffee cost? How much do the contents of your sandwich cost? How much does the pub pay for that bag of peanuts. These are simple retail costs.
With this you also have the R&D, paying for the factory to put it all together, shipping costs, distribution costs, retail costs, advertising plus ensuring there is enough in the pot to cover warranty problems etc etc.
Where the money goes
...is an interesting conversation, but one many people choose to be ignorant of. The reason this is especially interesting in regards to the Kinect is that there had been speculation that Microsoft was intentionally selling at a per-unit loss like they had initially done with the 360 and that the technology really was severely expensive to produce on a per unit basis. That marginal expense was also often floated around as a justification for the Kinect's high price point.
Despite some of the pro-MS commenter allegations, I don't think anyone has said Microsoft should not be allowed to make a profit. The question is really more if smartphone-range markups really make sense for console peripherals. I'd tend to say that overcharging for controllers, etc in the gaming world is the norm, but for me... I just can't see myself dropping $150 on a Kinect.
While we're on the subject of mark-ups, Walkman cassettes used to cost more to manufacture than CDs.
If you don't like the price, don't buy one! It's not as though anything terrible will happen to you if you don't; you've already managed without one for this long, anyway. If only more people would just *not buy stuff*, manufacturers might get the hint.
£35 to build...
...and £100 million plus was spend making the software.
That's an awful lot of devices they'll have to sell to start making a profit...
Have you seen their books??
£100 million plus sounds like an awful lot of coding for what this thing does. Not saying you're incorrect, but at £100K/year for a coder that would be 1,000 man years of effort to develop, more or less, a device driver with some gesture recognition/translation.
Maybe $100M for R&D is what you were trying to get at(?) Still, I'd be surprised if they didn't spend twice that on marketing.
Lets get this right, it's £35 for the parts right?
Okay, there is the labour involved in production, re-tooling production lines, advertising, promotion, transportation costs, profit margin for Microsoft, profit margin for retailers and packaging.
So when someone comes back with the costs involved with the above then and only then can you work out how much profit Microsoft/Retailer are getting.
*sighs* I wish people would think it all the way through first before their knee jerks up and smacks them in the chin.
Oh FFS! Shut up!
Not this tired old gig again! Yes it only costs 20% of RRP to make, but what about the R'n'D, the manufacturing, the transport, the middle-men markup, etc. Why does a 75p CD still retail at £15? Simple answer, everyone in the chain wants a cut of the action! Simple. Nothing complicated about it.There is an answer though....
IF you don't agree with the prices, then DON'T FLIPPING BUY THE PRODUCTS THEN!
It's that simple! Google may be raping your data without you having much say. The Gov maybe removing all our liberty and freedom one step at a time, while apathy persists. However you DO still have a choice about where your pocket money goes. If you don't like these things, then you spend the money on something more worthwhile, a movie you want, a different game, even a donation to a charity perhaps?
and the point of the arcticle is?
A DVD with the latest version of SQL Server costs 10p to make. It will set you back at least £3.000 to buy for the commercial SQL Server version. For Oracle you are looking more than £20,000 for the 10p DVD disk (not sure)
And your point is? This is as much it is about hardware as it’s about software. Do you think if you put all the components together you can make a kinect? I seriously doubt it.
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