Microsoft Xbox costs $525 to make

The triple core IBM CPU used in the Xbox runs at 3.2GHz, the lads reckon. This CPU costs $106 and that represents 20.2 per cent of the bill of materials (BOM) for the console.

Add in the other integrated circuits and the BOM is a staggering $340 per console.

ATI's graphics chip costs $141 including embedded memory from NEC, a Japanese company.

Add in the DVD drive to the Xbox Premium, the RF board, the wireless controller, the cable, the literature and the packaging and the total BOM is $525.

Isuppli didn't say how much the power cord cost.

Microsoft is selling the unit for $399. Shorely shome mishtake.