Microsoft has announced who will be the second Xbox manufacturer. Flextronics, part of Acer who produces the BenQ drives, is the lucky one. Microsoft hopes this can reduce Xbox costs and thus diminish the losses made on it.
Microsoft announced last May, shortly after it cut the U.S. price of the Xbox from $299 to $199, that Flextronics was shutting its Xbox assembly plant in Hungary and moving operations to China. Xbox units for North America are still manufactured at a Flextronics plant in Guadalajara, Mexico.
The move was seen as a sorely needed cost-cutting measure, as the price cut pushed up the significant subsidy Microsoft pays to get each console on the market, a subsidy it tries to recoup with sales of its own games and licensing revenue from third-party software. Analysts estimated that shifting production to China, which has some of the lowest labor costs in the industrial world, could trim Xbox production costs by $10 to $15 per unit.
Hopefully this will allow them to lower prices again. The complete story, right here.
Source: ZDNet
