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Comment by piotrSikora | Hacker News Reader

Best thing? Microsoft isn't making money on selling Kinect (or Xbox, for that matter), they are making money on selling games for Xbox.

How can making Kinect work without Xbox (and even without Microsoft's OS) can be a good thing for them? If this would let to increase in Xbox sales then sure, but the thing works without Xbox now, so I don't see why anyone at Microsoft should be happy about it.

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Source?

Last I heard, someone estimated the cost of the parts in a Kinect at $56, which is quite a bit less than the $150 they sell for. Even with all the related costs, they're making pretty good money off every Kinect they sell.

Simple Google search will reveal various sources quoting costs at either $56 (parts only) or $150 (manufacturing). Even if it would be indeed "only" $56 for parts, then you need to account for R&D, assembly, testing, packaging, worldwide delivery, marketing, not-so-small retailer's margin, import duty and VAT (where applies) and I'm pretty sure it would sum-up nicely to sub-$150.

Also, this is something that I consider "common knowledge" and I cannot point you to any sources, but for years console makers (Microsoft, Sony & Nintendo) has been selling consoles for (or even below) the manufacturing costs to allow for wider adoption.

From what I recall, Microsoft in the beginning was breaking-even after they sold at least 3 games for given console. That's why piracy is so big problem in the console world, not only is the console maker not making money, but they are actually losing money on pirates that only buy console.

The Wii is not a loss leader. Only the original xbox, ps3, and 360 are loss leaders. It's entirely possible for the kinect to be break even, or just barely loss, in which case I think Microsoft is willing to take the hit for more mindshare/market share.

Maybe their PHB and marketing drones won't get that, but I think their real managers and marketing people (they have to have exist for the xbox division to get where they are) are going to see how valuable this is. I mean, MS threw an entire hardware generation as a loss-leader, I think they'll happily take a break-even to make Sony look silly.

Yes, I completely agree with you... However, my point was that people who only buy Kinect (at break-even or some loss) without any intention of buying games or even console, cannot be the best thing (or even a good thing) for Microsoft, like dkokelley said.

Reread my original post. I said that the Kinect could bring innovation in other areas (beyond the Xbox), which in turn could sell more media center PCs, for example. I imagine that without the drivers, the Kinect would have remained a game controller novelty at best. I didn't intend to imply that the drivers would sell more Kinects or Xboxes.

Agree with your point, but just wanted to clarify that Nintendo do not make a loss on the Wii.

http://en.wikipedia.org/wiki/Nintendo_Wii#cite_ref-wiisalesp...

I don't mean that the Kinect will sell more of its own units, or even more Xbox units. My point is that by applying the technology from the Kinect, along with the creativeness of unsupported developers, Microsoft can reposition the device to sell many other things, like media center PCs - a market they aren't quite established in, given the competition from the PS3, Apple TV, or the myriad of other devices that are competing in that market.

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