Microsoft's Kinect, which is riding a nice wave of momentum from its successful launch last week, is a relative rarity in the world of video games -- a piece of hardware that is sold for more than its cost to produce at launch.

According to the teardown experts at UBM TechInsights, each Kinect unit -- which retails for $150 -- costs around $56 to produce. UBM says the low cost of production is due to the ingenuity of PrimeSense, a Israeli company that provides the Kinect with image processing, audio, and video by way of proprietary software, four microphones, an infrared camera, and two image sensors.

"The strength of the design is the huge design win for the Israeli company PrimeSense," said Allan Yogasingam, a technical marketing manager at UBM TechInsights. "They’ve provided the most innovative portion of the Kinect with their image processor, audio and video interface."

This is also a huge win for Microsoft, which struggled with the high production costs of the original Xbox -- a mistake it has gone out of its way to correct in this generation.

Source: EE Times