Xbox 360 subsidised by $75

Total cost of $375 mooted

Investment bank analysts at UBS have been casting an eye over Microsoft's approach to the Xbox 360 and have drawn a few interesting conclusions from a business perspective. According to the experts, the 360 will launch at the previously mooted $299 price point in November, but will be subsidised to the tune of $75 a unit to make this achievable. UBS therefore believe the system actually costs Microsoft $375 to make.

The subsidising of consoles at launch is commonly practiced by all the major players; the idea being that once these firms have established a strong user-base with the reasonable launch price, they can then make back their investments through software sales. The cost of building consoles also drops later in a system's life, and it is at this point too that platform holders begin turning a profit. This method was utilised by Sony in the current-generation, but it is believed Redmond failed to break-even after committing too much ongoing cash to manufacturing partners NVIDIA and Intel.

With the Xbox 360 however, Microsoft looks to be following Sony's example more closely, though UBS acknowledge that the $75 a console estimate is still very high. More on this soon.

By Luke Guttridge