Why does the Xbox 360 hard drive cost so much?

When I purchased my Xbox 360 I ponied up the extra cash to get a hard drive. Honestly, I think it was something of a mistake for them to release a SKU without the HDD, but I understand why they decided to do it. What I don’t understand is why it costs so much to add a new drive to your Core system. Well the analysts at iSuppli have dug deep and have discovered the breakdown of where your money is going. Hit the jump for the details.

• 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).

Honestly, after looking at the breakdown, it’s obvious that concept of purchasing a hard drive add-on was created solely to make you pay more money to enjoy your 360. Sure, that was pretty obvious before, but now it is more so. I think Sony had the right idea by allowing you to use just about any 2.5” drive that you wanted.

[via Kotaku]