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Xbox 360 maker drops production

Cower in the face of aggressive pricing demands
Mon Mar 26 2007, 16:50
MICROSOFT LOOKS set to lose one of its Xbox 360 production partners, according to Economic Daily News, one of China's top financial papers.

Wistron will stop producing the console within the next couple of months, with sources suggesting a variety of reasons. According to DigiTimes, The Vole has added Celistica to the roster of suppliers that produce the 360 console to spec, and is in the process of playing manufacturers off against each other to get the cost of the console down.

Xbox 360 production made up about 10% of Wistron's revenue, according to the reports, so this isn't an insignificant kick in the nads - but the dropping of the business suggests that the margins are even smaller, making it uneconomic to tie up company resources.

Indeed, reports have been ongoing, since early this year, that Volista is playing hardball when it comes to pricing, requesting a reduction in component pricing of around 10 per cent every quarter.

The introduction of Celistica is also part of a new strategy to expand the number of component providers. Lite-On is thought to be the latest manufacturer to produce HD-DVD drives for the 360's HD drive add-on, joining Toshiba.

The variety of 360 suppliers means that there are a number of different 'genres' of console on the market, with some sporting different configurations of USB chipset, DVD drive and heatsinks. Hackers have had a field day documenting differences and finding the weak spots, but consumers have also suffered from alleged poor quality control, with gamers suffering the dreaded Red Ring of Death upon console failure.

Xbox 360 is on course to hit 12m units shipped by the middle of the year, a little down from the estimates of 13-15m that Microsofties were thinking last year. µ


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