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Xbox Price To Shadow PS2, Not GameCube
Thanks to Reuters for their story indicating Microsoft won't necessarily act on Nintendo hardware price reductions. Xbox boss Robbie Bach, in a Tokyo news conference, suggested "...the company's main benchmark when it comes to pricing would remain Sony... and not Nintendo", and added "We've been selling at a price premium to GameCube since the first day and I don't think that's going to change." Elsewhere in the news conference, Bach talked about the long-term growth of consoles, estimating that "...video games have a penetration rate of about 40 percent, but that rate can grow to 80 percent over the next decade if games become more appealing to a wider audience."
I generally I'm an Xbox supporter (especially since I own one, and bought Soul Caliber yesterday, best looking game ever), but now that Nintendo has a two or three hundred thousand lead over Xbox in International sales, I see this price drop as very bad for Microsoft. I hope they won't have Halo 2 and Project Gotham 2, two games that the first iteration sell a gazillion copies, rushed in effort to sell more boxes, since these are two games I'm been waiting for since I bought the console 5 months ago.
I bet that people who buy GameCubes don't give a rat's ass about Eidos or Akklaim ending their support for the CG. Hell, I know that if I owned a gamecube, I would be playing only the Nintendo games. I'd leave the cross-plaform games to my Xbox.
So I don't see Nintendo as being less and less a player. It has less and less games, but hey, who cares if Akklaim never makes another Mortal Kombat or Eidos never makes another Tomb Raider for the GC?
Assume that every single casual gamer has a system (Xbox or PS2). The console market is now mature, and PS2 dominates this market.
This leaves two markets left: the non-gamer, and the hardcore gamer.
The hardcore gamer would want to buy a second system. He'd select this base on game exclusives. As Xbox has a handful of must-haves (eg. Halo, and KOTOR)... A lot of Xbox Xmas releases have been delayed, and in addition to this, a lot of the titles are multi-platform for Xmas. With the Nintendo price at $99 and with the most original first party games (eg.Mario Party 5, Double Dash, etc.), who do you think will win as the second console?
Finally, the non-gamer would choose his console most likely based on price and broader appeal for his family... most probably the Gamecube.
The Xbox will never get market share as the PS2 (it's too late), so it compares itself against Nintendo constantly. Yet, in this press release, Bach wants a wider appeal of videogames from a penetration rate of 40% to 80%. Based on the above, how well does it look like the Xbox will fare this Xmas season?
I think you're mainly right about people people not really caring about 3rd party games as much for the Gamecube, except I can't say I've noticed much, if any, difference in quality between the Xbox, PS2, or Gamecube. Though it cold easily have been the different TVs I was playing it on, but Soul Caliber 2 looked smoother playing on the Gamecube than it did on the Xbox. It probably was just the TV or something, but even still, assuming the actual quality is equal if you standardize a testing environment, the price difference is more than enough to pickup a copy of the game for the Gamecube. Then there's that whole controller thing. I haven't used an Xbox controller that I've liked yet, and I've used what I think are the three main ones. The Gamecube one is just much easier to work with. Can't really argue about the PS2 controllers though.
While this definitely isn't a death to the Xbox, when I go to the store and see $99 for the system that can play the games I can't play on my PC, and $150 for the system that can play most of the games I can play on my PC, plus hundreds more I could care less about, the choice isn't exactly hard to make. Microsoft has been used to being on top and being able to dictate prices for their products because there typically hasn't been too much commercial competition. They've made their software the standard and they're only just starting to lose that position. Console gaming is completely different than selling operating systems and word processors since their main market knows they have a choice and you don't have to learn how to use a Gamecube, because it's just not really any different from any other console. Microsoft doesn't seem to understand that they can't just dictate market price when they have competition unless their competition is in on it too. They're going to start losing market share even more if they keep up with their current mentality. As it stands, I can't find many things that the Xbox offers as unique. It had Halo, but guess what my friend is going out to buy later today for his PC?
Consumers will throw money at what they want, but most consumers who either don't know the difference, or just don't care, are going to pick up the cheaper of the two, that's common sense. MS is either going to have to make a real reason for owning their system, or start being competitive, if they want to do well.