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Kinect = $56 in parts


Gregory DG

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According to this:

 

http://www.joystiq.com/2010/11/13/kinect-hardware-worth-56-according-to-teardown/

 

the parts are valued at $56. Now, that doesn't include marketing, research, packaging, etc.

 

Thoughts?

 

Frankly, at any price, I don't see this as becoming all that successful. Especially at $150. Perhaps at $99 it would do better, but I doubt it. :?

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This is what I see as a huge failure with certain videogame products. Value is at an upmost right now with gamers and familes. A product gets hyped up to the public, and certain game companies think that they can jack up the price indefinitely. The Playstation 3 is a good example. Its slow market gain for years was due to partially to high cost. The 3DS is another example. Due to a strong public showing, Nintendo decided to raise the price of the system(STUPID MOVE). I think the Kinnect will probably still sell good for the holidays, but that does not mean that I like it or think that it is a good buy. $99 would have been a much better value for this thing.

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i think that sony and microsoft a re a couple years late on the wii hype..is the wii even something anyone cares about any more? the move your controller stuff is dead to me....so why sony and microsoft jumped on board is beyond me....they need to think up their own stuff....

 

Oh! Yeah! they could bring back good ol fashion 2d 3d games! those would sell for sure!

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i think that sony and microsoft a re a couple years late on the wii hype..is the wii even something anyone cares about any more?

 

I might be picking up a Wii next week (funds pending) and with a quick walk around the mall this morning I saw the red wii's flying off the shelves... so yeah there's still demand... for the Wii.

 

Whether that demand will automatically attach to the 360 and PS3 is another matter altogether. They're expecting to draw in the casual crowd like it's a given but the casual crowd is also a fairly cheap crowd overall.

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Thoughts?

It's a junk article. Component costs are only a small portion of what it costs to make something. As a consumer I don't care about their production costs anyway. I only care if they can sell it to me at a price I'd pay for it. That's probably why most consoles are sold below cost unless they use old technology like Nintendo chose to do with the Wii.

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Well, we all knew it would cost less than they would sell it for, doing the math I've always found consoles to cost less in parts I could buy at the time than what they cost in the store. Of course, I'd be missing the OS and case, but eh...

 

Anyhow, yeah, it should probably be $100, but to be honest, the high price is probably for the early adopters. I fully expect it to drop to $99 as soon as christamsss is over to be honest.

 

I'm still looking at the thing, but the space restraints on me means I would have to play it elsewhere, and likely not use it as much (as even my unused wii) so it would be a bit of a cost, but maybe some good (non sports) titles will eventually come out for the thing.

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there isn't an item out there that isn't sold for profit. add in marketing, shipping, paying employees, r&d, etc, the profit margin probably isn't that big.

 

i'd much rather a company set out to make a profit than follow the bullshit trend of "sell it at a loss and (hopefully) make it up in software sales" that sony started. the wii was sold for profit, that's why nintendo is rolling in money and it took sony and ms 4 years to start seeing dime one. software sales have been meh, that's why the industry is almost in the sh*tter.

Edited by xg4bx
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According to this:

 

http://www.joystiq.c...ng-to-teardown/

 

the parts are valued at $56. Now, that doesn't include marketing, research, packaging, etc.

 

Thoughts?

 

Frankly, at any price, I don't see this as becoming all that successful. Especially at $150. Perhaps at $99 it would do better, but I doubt it. icon_confused.gif

 

Precisely why new products are priced higher than later in their life. The research costs alone would have been millions. They're obviously pitching it at a price they think people will pay in order to at least recoup their outlay in developing the thing as quickly as possible.

 

But I do agree that they've probably got it wrong.

 

 

EDIT: Well, maybe not. This is a copy of a comment from the original breakdown article:

 

"I am surprised a product retailing at $149 would return a healthy profit with a BOM cost of $56! After 2 levels of supply chain margin there has to be room for assembly cost, test, QA and packaging/freight. Before profit, the remainder has to pay for R&D (incl software development), marketing, wastage/losses, NRE, insurance, I could go on. Can I ask, what do others look for in terms of margin when judging feasibility of one of their products? I would want to see a BOM of less than $20 here."

 

Been a few years but margin on product for the end retailer has always typiically been around 30%, although this margin can be much lower for the consoles themselves. So, assuming a retailer margin of 25% - 30% (it's probably lower), then you're talking about a cost of $110 to the retailer. Then you have the distributor's margin. No idea what that is but I'd guess maybe 10% - 15%? So that brings Microsoft's 'profit per product' down to around $45 - $50, which has to cover everything else in the comment above.

 

Actually, it is more complicated than that. The BOM may be lower because of Microsoft's bulk buying. The article doesn't point out if it's quantity pricing or not.

Edited by Tickled_Pink
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MS or any other company can charge whatever they want for any product and the consumer will decide with their wallet if the price is too high. I find no fault with MS for their MSRP as its a free market.

 

But it doesn't surprise me on iota if these figures are true as MS has a history of overpricing Xbox360 accessories, whether it was a hard drive or broadband adapter or memory stick.

 

 

Mendon

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  • 3 weeks later...

I'll have to admit, I really didn't want to get a Kinect, but my wife bought me one last month for my birthday. I don't have much to say except that it really is some good fun and it has got my wife back into gaming as well. So to me, it's well worth the price...unlike the Wii which she just had to have a couple years ago that has about an hour of play-time on it. As long as they don't try to flood the system with sub-par games, I think that the Kinect may have a place in many gamer's homes.

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Every company rapes you on their accessories if they can. Just need to find deals and not give them your life's savings.

 

I was at a Gamestop the other day, a relative of mine got a job there and they had Kinect and all the games for it on a display case and the first thing that came to mind was memories of the Wii and its promotions when it came out.

 

Completely unappealing and or interesting to me ATM.

 

The only thing I would buy if I did get a Kinect right now is

Kinect Sports (I loved Wii sports for what it was and this can only be better)

Dance Central for the family. Yes I like flailing around like an idiot to Young MC with the girls. (Just Dance for the Wii is quite fun when family is over at the house)

 

But in no WAY is this worth spending over 100 dollars for me especially since I do have the Wii. The Wii...when hacked...kicks everyone's ass. :D

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Frankly, at any price, I don't see this as becoming all that successful. Especially at $150. Perhaps at $99 it would do better, but I doubt it. :?

 

Yeah.. seems like kind of a risk. $150 is a hefty price tag for something that has yet to prove itself.

 

And considering the games shown so far all suck.

 

They also haven't learned, apparently, that game console peripherals don't tend to do well and games that depend on them do even worse. Everyone writing XBox 360 games is going to do so for the bare console because that's the broadest possible user base. Microsoft will probably be the only one releasing games for Kinect. Others may develop games and sell them to Microsoft so that Microsoft is the one that takes the marketing risk, but I doubt very many will strike out on their own with Kinect games and risk losing money.

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Every company rapes you on their accessories if they can. Just need to find deals and not give them your life's savings.

 

I was at a Gamestop the other day, a relative of mine got a job there and they had Kinect and all the games for it on a display case and the first thing that came to mind was memories of the Wii and its promotions when it came out.

 

Completely unappealing and or interesting to me ATM.

 

The only thing I would buy if I did get a Kinect right now is

Kinect Sports (I loved Wii sports for what it was and this can only be better)

Dance Central for the family. Yes I like flailing around like an idiot to Young MC with the girls. (Just Dance for the Wii is quite fun when family is over at the house)

 

But in no WAY is this worth spending over 100 dollars for me especially since I do have the Wii. The Wii...when hacked...kicks everyone's ass. :D

 

 

There's a difference between a peripheral and an accessory. An accessory is typically something you need like a controller or memory card. A peripheral is something that adds functionality, but isn't necessary to play all the games, just the ones that require it. Kinect is a peripheral, not an accessory and the history of console peripherals is not good. How many PS2 network adapters do you think sold? How many games required it? How about the PS2 hard drive or the EyeToy? How many Gamecube or Dreamcast broadband adapters are out there? How about the Sega 32X? How many games were actually released for the Intellivision ECS or the Starpath Supercharger? Kinect will go down in history as another thing that seemed like a good idea at the time, but never achieved enough sales for long term sustainability.

Edited by OldAtarian
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Since the software that runs those parts cost millions to develop, I think the article is a waste of space.

I think the price point is aimed at two things... early adopters and people that might buy a Wii in addition to their 360.

 

Wii has more games, even though many of them are junk. I doubt anyone is going to turn their nose up at a Wii in favor of a Kinect. The idea is laughable.

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Every company rapes you on their accessories if they can. Just need to find deals and not give them your life's savings.

 

I was at a Gamestop the other day, a relative of mine got a job there and they had Kinect and all the games for it on a display case and the first thing that came to mind was memories of the Wii and its promotions when it came out.

 

Completely unappealing and or interesting to me ATM.

 

The only thing I would buy if I did get a Kinect right now is

Kinect Sports (I loved Wii sports for what it was and this can only be better)

Dance Central for the family. Yes I like flailing around like an idiot to Young MC with the girls. (Just Dance for the Wii is quite fun when family is over at the house)

 

But in no WAY is this worth spending over 100 dollars for me especially since I do have the Wii. The Wii...when hacked...kicks everyone's ass. :D

 

 

There's a difference between a peripheral and an accessory. An accessory is typically something you need like a controller or memory card. A peripheral is something that adds functionality, but isn't necessary to play all the games, just the ones that require it. Kinect is a peripheral, not an accessory and the history of console peripherals is not good. How many PS2 network adapters do you think sold? How many games required it? How about the PS2 hard drive or the EyeToy? How many Gamecube or Dreamcast broadband adapters are out there? How about the Sega 32X? How many games were actually released for the Intellivision ECS or the Starpath Supercharger? Kinect will go down in history as another thing that seemed like a good idea at the time, but never achieved enough sales for long term sustainability.

 

I meant peripheral but its easy to just label it an accessory when it doesn't have that much use to you and its optional. I wasnt thinking about those things when I was typing. In fact maybe its both! LOL

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