ZDNet news cites Merril Lynch in reporting that Microsoft will be taking a hefty loss on each Xbox. Perhaps as much as $125 per unit, and that's before taking into account sales, marketing and other administrative costs.
... They're definitely not going to go above $300, Olhava said of the Xbox's price. The worst-case scenario is it's going to $299. The best case is that Microsoft drops the price down to $279, to undercut Sony a little. ......Blodget estimates Microsoft will sell 5 million Xbox units in fiscal 2002, peaking at 10 million in fiscal 2004. Microsoft's fiscal year runs July 1 to June 30...
...The more units Microsoft sells in the early years, the more money it will lose, Blodget said...
Pallor (aka Meg ) gets first blood on this item, however, for citing an MSNBC article about the same Merrill Lynch report. Microsoft may lose $2 Billion before possibly breaking even in 2005. It's clear that Microsoft is thinking ahead here, and has money to burn in order to achieve their final objectives.