Do A 360
So. Microsoft set the price of the upcoming Xbox 360 at $399. This is 30 percent more than the orginal Xbox and PlayStation 2 debuted at.
But interestingly, they are offering a stripped-down package -- without the 20 Gb hard drive, wireless controller, and a few other goodies -- for $299.
Any way you slice it, his is a win-win situation for Microsoft. By launching this November, anywhere from half a year to a year ahead of Sony's PlayStation 3, Microsoft holds all the cards. By offering two prices instead of one, they blunt the impact of the higher price.
Sony's PS3 point man, Ken Kutaragi, has been going on record in recent months saying all kinds of crazy things about the PS3 pricing. He's said things to the effect that if people really want the PS3, they will be willing to work overtime to get it. I think he also mentioned a pound of flesh, a third mortgage and something about first-born sons.
I halfway think Sony is doing a head-fake here, getting Microsoft to think that it will charge an arm and leg, and then, when the console actually hits shelves, they will price it at $300 and that will seem incredibly cheap compared to expectations. It doesn't matter if that's the case or if it really will cost a lot. Either way, Sony is screwed.
Let's say Kutaragi is being honest and the PS3 ends up costing $400 when it hits the U.S. market in holiday 2006 (they haven't announced a launch window yet, but that's everyone's best guess). The 360 will have been out for a year. Microsoft will almost certainly take the opportunity to steal some of the PS3's thunder by dropping the 360's price by at least $50, maybe $100. Oh, and Bill Gates has hinted they'll time the launch of "Halo 3" -- the sequel to the most popular Xbox titles ever -- to coincide with the PS3 launch. That one-two punch will be hard for Sony to beat.
But what if Kutaragi has been a sly dog all this time and Sony surprises everyone with a cheap price tag? Well, it won't be cheaper than $300. Sony's new Cell chip architecture was reportedly a bear to develop and produce. They are stuffing in new technology like a blu-ray DVD drive. If it it comes in below $300, I'll eat my running socks. In this case, Microsoft does the same thing. They drop their price $100 and play up their latest games.
That's another thing. The games. The new systems are more complicated to code for. It will take time for the developers to learn all the tricks and fully utilize all the power in those shiny little boxes. But the 360 developers have a year's lead time on their PS3 counterparts. Stuff like "Halo 3" and whatever other A-list 360 games they roll out for the 2006 holiday season will look markedly better than the stuff coming out this year.
I don't think the new Xbox will necessarily overtake PlayStation for the title of King of the Console Hill. Sony has too many loyal users -- especially in Japan, where the Xbox has more or less completely fizzled -- for that to happen. But the combination of early launch, pricing power, gold star developer backing, and the quality of the Xbox Live online service may be enough to send Sony sprawling against the ropes this round.
But interestingly, they are offering a stripped-down package -- without the 20 Gb hard drive, wireless controller, and a few other goodies -- for $299.
Any way you slice it, his is a win-win situation for Microsoft. By launching this November, anywhere from half a year to a year ahead of Sony's PlayStation 3, Microsoft holds all the cards. By offering two prices instead of one, they blunt the impact of the higher price.
Sony's PS3 point man, Ken Kutaragi, has been going on record in recent months saying all kinds of crazy things about the PS3 pricing. He's said things to the effect that if people really want the PS3, they will be willing to work overtime to get it. I think he also mentioned a pound of flesh, a third mortgage and something about first-born sons.
I halfway think Sony is doing a head-fake here, getting Microsoft to think that it will charge an arm and leg, and then, when the console actually hits shelves, they will price it at $300 and that will seem incredibly cheap compared to expectations. It doesn't matter if that's the case or if it really will cost a lot. Either way, Sony is screwed.
Let's say Kutaragi is being honest and the PS3 ends up costing $400 when it hits the U.S. market in holiday 2006 (they haven't announced a launch window yet, but that's everyone's best guess). The 360 will have been out for a year. Microsoft will almost certainly take the opportunity to steal some of the PS3's thunder by dropping the 360's price by at least $50, maybe $100. Oh, and Bill Gates has hinted they'll time the launch of "Halo 3" -- the sequel to the most popular Xbox titles ever -- to coincide with the PS3 launch. That one-two punch will be hard for Sony to beat.
But what if Kutaragi has been a sly dog all this time and Sony surprises everyone with a cheap price tag? Well, it won't be cheaper than $300. Sony's new Cell chip architecture was reportedly a bear to develop and produce. They are stuffing in new technology like a blu-ray DVD drive. If it it comes in below $300, I'll eat my running socks. In this case, Microsoft does the same thing. They drop their price $100 and play up their latest games.
That's another thing. The games. The new systems are more complicated to code for. It will take time for the developers to learn all the tricks and fully utilize all the power in those shiny little boxes. But the 360 developers have a year's lead time on their PS3 counterparts. Stuff like "Halo 3" and whatever other A-list 360 games they roll out for the 2006 holiday season will look markedly better than the stuff coming out this year.
I don't think the new Xbox will necessarily overtake PlayStation for the title of King of the Console Hill. Sony has too many loyal users -- especially in Japan, where the Xbox has more or less completely fizzled -- for that to happen. But the combination of early launch, pricing power, gold star developer backing, and the quality of the Xbox Live online service may be enough to send Sony sprawling against the ropes this round.
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