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Comment by BarkMore | Hacker News Reader

At the start of a product cycle, game consoles are typically sold at a loss. Manufacturers recoup this loss through licensing fees paid by game publishers.

If Microsoft is selling the Kinect at a loss, then Microsoft will be motivated to keep it locked down to ensure that they can recoup the loss through licensing fees.

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MS actually makes money on each Kinect sold. See http://www.mcvuk.com/news/41487/Kinect-priced-for-profit

So in theory each Kinect sold for hacking is money in MS's pocket.

Given that MS has bought a slew of patents all around this space, they may be playing coy here.

"Please don't hack this... please don't. Oh drats, you figured out a way around our advanced hack-proof system. But what can you do with it? Nothing probably, you surely can't think of some really cool ideas that we haven't... Oh you can give some additional hints to your Roomba from the couch with hand gestures... go on..."

I don't think this is a very convincing argument. I don't think there have been many examples of people building games for the PC using the Wii controller. I suspect that the same goes for the Kinect. The vast majority of people buying this will be people buying it for the XBOX, with a small proportion of geeks using the open source driver for interests sake, but not the sole purpose of buying it.

Sony suffered a bit with the PS3 being used by Universities as cheap super computer clusters. I believe from memory PS3 had a very low attach rate (the number of games purchased per console). Though from Sony's view point they are also trying to move TVs and ensure the success of Bluray so perhaps they were happy with a low rate.

The Kinect isn't a game console. It's possible that they are selling it at a lost, but not likely. That said, Nintendo doesn't sell game consoles at a loss (at least they didn't with the Wii). I think that by 'typically' you mean that Microsoft and Sony do it. I have no idea if Sega or ATARI ever did that for their consoles.

The Kinect isn't a game console, yes. It is still a significant piece of hardware though, and there is quite a bundle of technology inside it. Just because it is an "Add On" device does not mean they priced it as a single use device. From what I've heard it requires its own developers kit additional to the standard kits sold now, and is unique to the way Microsoft usually deals with developer extras. It sounds like they are investing in this taking off and the licensing of game studios, and the sales of those games, to subsidize the product in some degree.

To answer the second question, I know the Dreamcast was sold at a loss. The Nintendo 64 and GameCube were as well, but Nintendo decided that the Wii could be a success if they tried something new instead of trying to be bigger and better.

Selling the Wii above cost may not be standard industry practice, but it was standard practice for Nintendo. The GaneCube was the only Nintendo console that was ever sold at a loss. And it was a small loss for a very small period of time. The N64 definitely wasn't -- why do you think Nintendo used a cartridge system while everybody else was going for rotating discs?

http://www.actsofgord.com/Proclamations/chapter02.php

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