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 Why are Xbox 360 HDDs So Expensive?

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PostSubject: Why are Xbox 360 HDDs So Expensive?   Thu May 08, 2008 11:36 pm

Why are Xbox 360 HDDs So Expensive?
Hardware analyst offers insight on HDD costs.


Maybe after filling your Xbox 360 hard drive, you've looked into buying a bigger model. Whether or not you went through with the painful purchase, there was probably a considerable amount of sticker shock. Stand-alone HDDs are fairly cheap these days, so what's behind the high price for the Xbox 360 models?
Patrick Klepek recently wrote a report on the MTV Multiplayer Blog that took a look at a cost breakdown for the expensive units with the help of consumer electronics analyst Krishna Chander from iSuppli. Chander explains that the HDDs come preloaded with demos and some parts of the system's OS, which adds dollars to the equation.

The analyst went on to explain that the 360 HDDs have color tuning and packaging, which also drives the price up. Then we bring in Value Added Resellers for the casing and product packaging. At this point, the price stands around $80, with a $20 markup to total around $100 to Microsoft. From here, the Manufacturer's Suggested Retail Price (MSRP) stands at $179.99 to give an $80 profit to the retailers. Store owners are allowed to drop the price, but usually decide not to.

The article does note that these are estimates from an analyst who has no direct ties to Microsoft, so actual profit mileage may vary. Either way, the various costs that drive the price up probably means we won't see the expensive gizmos dropping anytime soon.

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