A “highly-positioned, trusted source” has told Develop that the manufacturing cost of Microsoft’s Kinect hardware is around $150, which is the same price rumored for the camera's MSRP. The price seems to be an issue within Microsoft, as an internal dispute has begun over the retail price of the machine, which was originally slated to cost far less.
When contacted, Microsoft gave a boilerplate response saying the company “does not comment on rumour or speculation.” The company does understand that the ‘impulse buy’ range for the Kinect would put the peripheral’s price around the same $150 price point.
Develop also spoke with Ed Barton of Screen Digest about his feelings on the suspected costs. “In pure console peripheral terms, $150 costs are expensive but the question is how much Microsoft is willing to cut to raise market share,” he said. “The further above manufacturing costs it is, the tougher it becomes. Especially since Microsoft is targeting Kinect to a more casual market.
“Presumably, a big portion of Microsoft’s target market for Kinect won’t have a console already, so adding in the console costs along with the camera costs, the result is starting to look a bit pricey,” he said, noting that many ‘casual’ game players do not already own the 360 console itself.
Barton says that the acquisition of Primesense, a 3D imaging software startup holding many of the patents related to the Kinect, may factor into the costs of the accessory.
“There’s basic hardware tear-down costs but Kinect isn’t just a number of components, it’s also a software layer – one that is absolutely key for the whole experience,” he adds. “Kinect’s R&D costs might be sunk into the manufacturing costs, because Microsoft needed to ensure that Kinect’s basic imaging actually has a software layer that can be fed into the developer toolchain.”
Barton remains confident that Kinect may have implementations outside of the gaming industry. “I wouldn’t at all be surprised to see Microsoft apply the technologies elsewhere, for things like video conferencing,” he said. “It may have been possible, in its planning, that Microsoft has decided the investment it has made into Kinect can spread across all sorts of areas beyond gaming.”
“The commercial guys at Microsoft will obviously want to sell the unit at its lowest price, but the accountants will be arguing that Microsoft has to start paying for all the R&D and goods that got it to this position,” he concluded. “The one thing that Microsoft has proven over the last few years, especially with its aggressive price cuts, is that the company is prepared to add pressure on itself to win market share.”
