The cost to manufacture Dreamcasts?

[CD AGES]

I gotta question some of this a bit, Was it really such a big deal DC's were sold at a slight loss?

Well... before the advent of the Dreamcast, SEGA wasn't financially in the best position. Dropping Saturn as early as they did to get a head start on the Next Gen with Dreamcast was their attempt at making the company profitable once again. Selling their hardware at cost (or at a loss outside of Japan) on day 1 does seem like a big deal considering their position at the time.
Considering SEGA abruptly fired Stolar (and at the cusp of the console's launch no less) after pricing the system at $50 less than what was intended, is rather telling. As you mentioned, the razor blade business model (selling hardware at a loss in an effort to increase the install base and profit from software) is a common strategy in the industry. But one SEGA ultimately couldn't afford to make.

[Ian Micheal]

It was a huge deal they sold at a loss because they only made money on software they was selling them self into nothing when the dc was cracked there was no point selling more consoles at a loss to get no money from software

Infact just before they pulled the plug sales of the dreamcast were up over %50 then the month before.. sold any more they not exist

[CD AGES]

Infact just before they pulled the plug sales of the dreamcast were up over %50 then the month before.. sold any more they not exist

That was perhaps also due to SEGA selling their remaning hardware inventory at $99 (and later as low as $49) in an effort to liquidate. I recall hearing their back channel being so full of Dreamcast inventory to the point that SEGA stopped manufacturing WAY before they announced to pull out and discontinue support of the console.

[beanboy]

Similar to what dark said on page 1, from what I remember, it was like from around $250 to $300 per unit. I think even Adam Sessler, and another tech journalist many years ago, mentioned similar numbers on TV.

[Tarnish]

We'll never know, but I wonder how different would the sales numbers have been at the originally intended $250 price.

[CD AGES]

We'll never know, but I wonder how different would the sales numbers have been at the originally intended $250 price.

I can't imagine an additional $50 having any major change in the systems sales numbers at launch here in the west. Even at $250, it's still a really flexible introductory price for a next gen system, especially when considering previous gen launch prices were between $400-$300.
It certainly didn't affect demand in Japan where it sold for that amount and with an even weaker software lineup at launch.

That said, for me personally, the scenario that I find more worth exploring is, what IF instead, the system kept its (desired by Stolar) $199 price at launch BUT without the Modem included?
The modem itself increased the system's manufacture cost to an additional $30 (according to Yoot Saito). The modem could have been sold separately, leaving the choice up to the consumer whether they wanted to explore the system's online capabilities from the start or later on down the road. I mean lets face it, the system's online network and its features were practically barren during its first 6 months on the market. SEGA-Net really didn't start taking shape until almost a year later when a steady stream software started to come out that took real advantage of the service.

[beanboy]

You have a good point there.