iSuppli Xbox360 BOM

iSuppli has a BOM analysis up on the 360, no doubt a result of AnandTech’s hard work. Looks like Microsoft (MSFT) is using the hardware as a loss leader, just as they did on the original Xbox. They estimate the premium Xbox (with hard drive, RF Controllers) has a material cost of $540. The box retails for $399. Their silicon cost estimate for the IBM uP at $106 (looks like a 13x13mm die) is, if anything, aggressive. Microsoft has declared war in the living room and is not afraid of a high body count.

No Xbox360 here in our offices or any of our homes in the near future, though if we had an unopened box we would feel financially and morally obligated to pay a visit to EBay. The best arbitrage play of the year would have been pre-paying for these systems and selling them on Ebay for 3x markup. Who would have known 3MM people have $500 burning a hole in their pocket – it illustrates the huge role gaming is now playing as part of consumers entertainment budgets.

Our personal interest lies primarily in the ability to access Windows DRM music from the likes of Yahoo! Music Engine (I am a big fan) – something Tivo cannot do.

Microsoft is committed to seizing the commanding heights in your living room… and we think they are doing a damned good job.