Why are Xbox 360 HDDs so damn expensive?

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I’ve always wondered why the HDD for the Xbox 360 was so expensive and just assumed it was a proprietary matter because Microsoft likes to do that sort of thing, but I never bothered to look into it. My Elite has 120GB so I don’t ever need a new one. Anyway, MTV’s Patrick Klepek really wanted to know why a 120GB drive is $180, so he called up iSuppli and this is what he found.

– The HDD ships not only with pre-installed software (demos and/or XBLA games), but part of the console’s OS itself. This = increased costs.

– The HDD must be coloured and shaped to fit inside the specially-designed housing that ensures only your 360 can use the unit. That’s more extra expenditure. This is done by a “Value Added Reseller”, who also take care of the HDD’s retail packaging.

– Microsoft have at this point paid an estimated $100 (iSuppli can only go estimates, though as specialists in this stuff their numbers won’t be far off), and then split the remaining $80 profit with retailers and distributors (a 120GB HDD retails for $180).

List ganked from Kotaku.