Xbox 360 Drops 40% in Manufacturing Costs

Microsoft is now making a profit on 360's according to analysts iSuppli's most recent breakdown of the component costs.

When the Xbox 360 launched a year ago, it was believed that the components that make the box cost around $525 USD. That left Microsoft with a loss of USD $124 per system sold. In a year though, component prices have dropped and it looks like Microsoft could be saving as much as 40% on manufacturing costs. Currently it's estimated that the Xbox 360 costs $323 to manufacture leaving Microsoft with a profit of around $75 per system sold. It looks like Nintendo isn't the only one making money on console hardware anymore.

What could Microsoft do with that 40% drop in manufacturing costs? Perhaps the old 20 GB hard drive will be replaced with an 80 GB hard drive on the Premium system? Maybe they could change the logic board to include an HDMI port along with an HDMI cable. Or how about just a good old fashioned price drop? The Playstation 2 sold 3/4 of it's install base when the system hit USD $199.99, if Microsoft dropped the Core system to that price point they could see the same success. At that price the Core would even be cheaper than Wii!