Apple-Epic court case: Microsoft exec reveals Xbox is not a profitable business
The same is said for Sony’s PlayStation segment in the court documents as well.
Apple and Epic’s court battle is resulting in a whole lot of revelation than what one anticipated. This time, a Microsoft executive has admitted (during the court case) that the Xbox console business has never been profitable. The same is said for Sony’s PlayStation segment in the court documents as well. This piece of information was revealed by Xbox vice president Lori Wright.
When asked “How much margin does Microsoft earn on the sale on the Xbox consoles?” by the Epic Games lawyer, Ms. Wright replied that “We don’t. We sell the consoles at a loss.” When the lawyer asked again “Just to be clear, does Microsoft ever earn a profit on the sale of an Xbox console?”, Wright just replied with “No”.
As mentioned in Thurrott.com, console makers are familiar with this. They often try to make up for the losses from the hardware business by offering software and services. “In the case of videogames, hardware makers also try to cut costs over time by manufacturing cost-reduced versions of their consoles that still lose money, but less money,” stated the website.
So, how is this related to the Apple-Epic trial? It was to show how videogame and smartphone markets are different despite both taking 30% cuts. For Xbox, this is how Microsoft tried to make up for the loss. However, in Apple’s case, the firm already has margins on its iPhone and iPad hardware and it does for the App Store as well.
However, this is not the only information that comes out of the Apple-Epic court case. Recently it was also revealed that Apple chose to hide a mass hack on 128 million iPhone users back in 2015. In another instance, it was revealed that Apple also thought of bringing iMessage to Android at some point. However, that did not happen as the firm wanted to keep users trapped in its ecosystem.