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The 360 Is Too Cheap?
The always interesting GamerDad site is running a 'LongShot' column wondering if perhaps the 360 wasn't expensive enough? From the article: "The beginning of a console generation has typically been for those with deep pockets or an unhealthy hardcore jones for videogames. These people are willing to smack down big bucks for the latest technology. The price of 360 was too low to keep the launch confined to that group and it was a big mistake in my opinion. With a higher price tag, Microsoft would have made more money, made sure sellouts wouldn't have lasted for months after Christmas and still sold through all the units they had to sell before the holiday. The demand for a new system was far higher than most people anticipated, especially given the early demise of the original Xbox, a system that will probably be gone from store shelves by February 2007."
It's too cheap?! Darn. I was just about to buy one too. Hopefully the PS3 can deliver in price!
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That has to be the most reaching analysis I've heard yet. His basic argument is that gamers have grown up, therefore they're willing to spend gobs more money. I'm sorry, did he miss the $400 price tag? Many of the early units were sold for far more than that! If it was priced any higher, consumers would start to wonder why they shouldn't get a new gaming-rig computer instead! (Or at least a bigger HDTV and a load of HD-DVDs or BlueRays.)
If Dave of GamerDad wants to know why the 360 isn't taking the market by storm, he needs to look no farther than the games. As X-Play on G4* said, (and I'm paraphrasing here) "The XBox 360 needs to stop charging more money for less game." (In a review of Tiger Wood's Golf.) Microsoft and their affiliates need to realize that pretty graphics are not the only ingredient in making a good game. When you pay $60 for a game, you expect to get enough to entertain you until at least your next paycheck!
* No, I don't normally watch G4's game shows. I just happened to see their marathon of reviews this weekend. Which again convinced me why modern gaming sucks. Now, will someone please tell the hosts to stop nodding and making faces while the other person is talking? Also, get them into some adult-looking clothes without pockets. They look absolutely shriveled up with their arms so close to their sides. Last but not least, they need to eschew the ridiculous stream of bad jokes in favor of a few good jokes (read: not stupid!) and more off-the-cuff banter between the hosts. This practice of reading j0kes from a script really shows.
Javascript + Nintendo DSi = DSiCade
> With a higher price tag, Microsoft would have made more money
Pure speculation, your honour. They'd have made more money per unit, certainly. That's about all you can say.
Does anyone know at this point how Microsoft made out on the 360 launch? Also, what about if MS had delayed the launch, what would have happened? Many people (well, mostly Sony fans) think MS rushed the 360 launch and should have waited for HD-DVD.
He's absolutely right. I mean, look at the 3DO. The perfect price point got it the penetration that it needed.
This guy's the limit!
Of course the 360 was too cheap. Look at what they went for on eBay.
Microsoft obviously failed to find the appropriate point on the supply/demand curve for the market.
:(){
...that early demise which hasn't happened yet really hurt the Xbox...
*roll eyes*
The article calls Microsoft an "also-ran console maker in a Sony-dominated market" with respect to the Xbox. Please. Xbox had its problems (especially in Japan), but Microsoft went from 0% market share to beating out Nintendo's Gamecube, a company with established name.
They've sold 22 million units for chrissakes! There are ghosts of consoles (like the Dreamcast) that would have killed for that kind of "early demise".
Whatever.
He forgot the most important group: Parents that cannot say 'No' to their kids. Hence, you price it at their limit to maximize profit over the Christmas season.
If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be.-TJ
Microsoft realizes that artificial shortages creating massive hype for their product even at an exorbitant price range (yes, 400 is too much for a toy) will allow them to sell more machines longer, rather than making them readilly available at a higher cost, and trying to sell them all immediately. Author is a moron. Article is very poor trollbait.
If Microsoft had realized the production problems they were going to face (or admitted to themselves they were going to have them, if they knew early as some say they did) then yes, a high price point causes the "per unit" loss to go down or even become profitable. If you only have N of something, you can charge a premium. The bundles proved there was a market for high end spending, but postulating that they could have moved *all* the units sold to date at a grossly higher price is a bit of a stretch.
To say that Microsoft missed the boat and the PS3 should be sold at a premium really depends on the actual costs at time of release. Sony already *tried* the high priced solution with the PS2 based media product in Japan. That isn't apples to apples though since it was competing with the existing PS2 installed base, which isn't a wise choice. If they expect shortages of Blue-Ray drives or the processors, perhaps they could try the strategy of $800 boxes. I think it is high risk though: the reviewers are going to tear you apart if you don't deliver a $800 experience.
Sig under construction since 1998.
No.
Good karma sticks to me like velcro on a piece of plexiglass.
Move along, citizen.
A shortage occurs when quantity demanded at a given price exceeds quantity supplied at the same price. By the shape of demand curves, this also means that the price for a given quantity on the demand curve exceeds the price for the same quality on the supply curve. The profitability of console scalping on eBay during the first month after the Xbox 360's introduction proves the difference between the suggested retail price and the price that the market will bear.
Slate magazine said the same thing four months ago:
The Great Xbox Shortage of 2005
Xbox Economics, Part 2
They have plenty of data about consoles launching in the $300 - $400 range and not flopping terribly. There haven't been any successful consoles (if any, at least that I know of) that have launched in the $700 range. lack of market data from previous launches like that makes a move like that extremely dangerous to do. And selling out is also a great way to build up steam for people to want it more. Reguardless of the price, if I hear console A is selling fast compared to console B that is selling slow, I'll be more interested in console A to see what people are so interested in.
In undeveloped countries, the consumer controls the market. In capitalist America, the market controls you.
The premium was several hundred dollars above retail. Someone pocketed that profit and it sure wasn't Microsoft. It'd say the author's point is valid on those grounds alone.
What GamerDad said is that the only people who are buying XBox 360s at this point are the people who are so stupid they'll pay any price for a video game system regardless of the quality. Hence, Microsoft should have jacked prices up higher initially to build up a war chest, and then lowered the prices once the supply and game library problems the XBox 360 suffers from have been solved well enough that it is time to market the XBox 360 to the non-stupid demographic.
It's kind of a flawed plan since initial momentum is such a big deal in the video game market, but from a pure microeconomics perspective, it makes sense. Gouge the early adopters, then lower the prices to attract everyone else.
I'm still waiting for prices to drop on the plain vanilla XBox. Call me a cheap bastard for wanting a $100 USD console.
The declining prices of the XBox 360 will surely seal its doomed fate.
The argument was already made before christmas that Microsoft could have made more money if it was priced higher because the prices on ebay showed that *some* people were willing to pay up.
... that it might give the wrong impression since ms is insisting they can't build them fast enough.
The problem was, and remains, that the rest of us certainly isn't, and the early adopters would be mightily pissed off if there was a big price drop 4 months after they got theirs.
Just noticed that in Ireland shops have started to offer free Live subscriptions and game vouchers to get them off the shelves. Right now I'd say less expensive would probably be a better idea, except
Sure, MS could have squeezed some more $$ during that initial run..but the risk of having the units sit on the shelves was huge. that's an armchair quarterback statement. It could have negated the impact of a new console release. You're talking about risking throwing away years of big $$ for the chance to make a few extra bucks per unit (this is a millions to billions argument). The goal is to get as many out there ASAP in front of the others to get a foothold..and reap the benefits down the road. MS's failure here was their inability to get their supply chain in order to meet demand.
Of course they think it's too cheap. Everyone who thinks it's too expensive is out working their second McJob to buy it.
It's hard to really tell one way or the other, but he could have a point. I think the price-point of the 360 was less a function of the value and more a function of the perceived value. If the system cost too much, people wouldn't think they were getting their mony's worth. If the system cost too little, people wouldn't take it as a serious piece of hardware.
I think the biggest problem was the enforced bundle. No, I'm not talking about the way gamestop raped their customers. I'm talking about the core vs. premium. I think MS could have had a much more effective launch by sellng a single $350 unit that was the system, wireless controller, play and charge adaptor, and s-video cables. Everything else could be an add on for a "reasonable" price. Think about it, the only thing missing is the hard-drive. Sell it at $75 dollars and force the early adopters to HDTV, who probably could afford one more perchase, to purchase the HD cables, and you have a console that implies the true capibilities of the system.
Any and all profit they could have made on the boxes is totally insignificant to them. MS makes billions, a million or two from this doesn't matter.
What is more important is getting lots of those consoles out there. They want everyone to own one. Well this shortage goes a long way to that. For one it generated massive advertising, you can't buy advertising as good as the 360 hype. Also, it has lead to an aura of "specialness" about the 360. It's hard to get, so it's coveted so people will work for it. Finally, you don't want people getting the idea in their head that it's expensive, you want them to think of it as cheap. Absolute price plays a factor, but also the sellout helps that. If something is sold ou all the time, it's obviously cheap right?
Really, I think this has all played in to MS's hands magnicifently. By the time the PS3 launches, they should have a good pipe of supply going on and be ready for a rpice drop. So the PS3 comes out, they slash prices and flood 360s on the market, not to mention release Halo 3 which has conveniently been finished then. Go a long way to taking the thunder out of Sony's US launch, which is what this is really about. The overall name of the game and the money to be made is not on the consoles, but on being bigger than Sony in the market.
I don't know if you've noticed, but XBox 1 prices are actually going up most places. At all my area gamestops, a new XBox is now $180, whereas before the XBox 360 launch they were only $150.
The thing is this: Normally after a console launch, the previous console lowers in price, because demand for the old console plummets but supply of the old console is still relatively high. However, in this case the opposite is happening. Supply of the XBox 1 has plummeted-- but because the XBox 1 still has a vastly superior game library to the XBox 360, and because the XBox 360 is largely unable to play that game library, demand for the XBox 1 is still quite high. This means the prices on the XBox are rising. This is probably going to continue for some time. By messing up so badly on the backward compatibility, price, and supply issues, Microsoft has made the XBox and XBox 360 are competitors at this point, and so far the XBox 360 is not winning.
on what you mean by 'penetration'. . .
It got 'penetration' alright. . .
They could have sold through a lot more if they didn't ship 150k units to japan that only sold like what? 10k units? I think they wanted to believe so much that the 360 could take off in japan that they ignored reality. It wouldn't :)
That really hurt them at the beginning. I wonder if it affected the total number of possible sales?
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What they're basically trying to say is that the XBox 360 sold out because Microsoft priced it low enough that people could actually afford it. An apt comparison would be the recent HD-DVD launch. They've priced the damn things so high that nobody will buy them unless they're simply drooling at the possibility of being able to buy a shiny new toy. Early-adopters and the obsessed will typically buy new products for prices that are far above what anyone else is willing to pay. The statement then, is that the pricing was low enough that it wasn't restricted solely to the early-adopter/gotta-have-it/price-is-no-object segement. As a result the system sold out.
There are, however, flaws with this reasoning. First is the idea that the launch of a new product should be accompanied by a phase of normal people wanting it, but feeling the damn thing is just too expensive to drop that kind of cash on. Quite frankly this is idiotic. Sure the company might make a bit more money, but it doesn't help the consumer in the slightest.
The second problem is that Microsoft only intended this hard-core segment to purchase the Xbox 360 at launch. This is patently untrue. They hyped the hell out of it and barely let up. They wanted everyone to be rushing the stores to buy one just like it actually went down. The problem is that Microsoft screwed up and didn't have the stock they needed.
Quite frankly it feels like someone who was pissed because they couldn't easily get their hands on one and would have been willing to pay more so they could have.
I know its kind of offtopic but I don't understand why microsoft doesn't act like every other console maker and make a leaner looking lower priced version of the original xbox...which I might actually be tempted to purchase
Not expensive enough? Go to hell. It's a fucking video game system, not a goddamned Rolls Royce.
I know, let's just raise the MSRP 1000x and then we only need to make one sale!
In Mexico the launch price for a 360 was $600 dollars or even more, expensive enough for me.
Microsoft isn't there to make money off the systems. They are in it to make money from the games.
If they price the systems too high and if the market won't go crazy trying to buy the X-box 260, then game software companies won't want to dedicate their resources to something that won't make them money.
To prothesize about making the X-box more expensive is just plain stupid. Microsoft has the best MBAs out whose job it is to set prices, and this English major who writes freelance articles thinks he knows what Microsoft should be doing?
400 was a good price point because it allowed most gamers the chance to buy a system. Microsoft loses money on each system sold, but makes money on the games. Once a person buys a system, they will have to buy games because otherwise they will feel like they wasted money on the system. Microsoft wants everyone to be able to buy a system, and hype from sellouts fuels more sales.
See this article which quotes Ebay CEO Meg Whitman, who claimed that as of Dec-12-05 of the 400,000 units sold at that time 10% had been resold though ebay. Pretty significant numbers, I'd say. If ebay is good for anything, it is to track current market rates for just about anything. The average pre-xmas price for a 360 was $718.00. That's several hundred dollars lost to MS per unit (or gained by the reseller, if you prefer).
I think i saw something, maybe on here, someone had the launch prices of all major consoles adjusted for inflation. Actaully i just googled it and here it is from IGN
Atari VCS launched in 1977 for $249.99 __________________ $811.21 in 2005
Nintendo Entertainment System launched in 1985 for $199.99 _ $354.91 in 2005
SEGA Genesis launched in 1989 for $249.99 ______________ $389.67 in 2005
NeoGeo launched in 1990 for $699.99 ___________________ $1041.12 in 2005
Super Nintendo launched in 1991 for $199.99 _____________ $282.21 in 2005
Jaguar launched in 1993 for $249.99 ____________________ $328.69 in 2005
3DO Interactive Multiplayer launched in 1993 for $699.95 ___ $920.30 in 2005
SEGA Saturn launched in 1995 for $399.99 _______________ $497.66 in 2005
Nintendo 64 launched in 1996 for $199.99 ________________ $242.75 in 2005
SEGA Dreamcast launches in 1999 for $199.99 ____________ $228.09 in 2005
PlayStation launched in 1995 for $299.99 _________________ $372.01 in 2005
PlayStation 2 launched in 2000 for $299.99 ________________ $333.15 in 2005
Xbox Launched in 2001 for $299.99 _____________________ $325.34 in 2005
GameCube launched in 2001 for $199.99 _________________ $216.89 in 2005
So according to this, the launch price for the 360, when adjusted for inflation is actually below the historical average of $453.14, and probably only a little above average if you ignore the NeoGeo and 3DO. This also means that the Nintendo Revolution, if it launches at the predicted $149 or even $199, is going to be the cheapest console ever. And, unless sony pulled some piece of patent infringeing crap out of their ass at the last minute, the most technically advanced, not counting pure graphical performance.
"Sic Semper Tyrannosaurus Rex."
"The beginning of a console generation has typically been for those with deep pockets..."
Does this man realize how much of a bourgeois elitist he sounds like? "Been for those with deep pockets" as opposed to those who do not, who should not be allowed to have modern forms of entertainment. They should just be allowed to have their poverty and that should be enough for them right?
Actually, I agree with him. From a pure supply and demand perspective, the 360 should have been priced $200-300 higher in the US at release. But the high demand would have only lasted for a few months, and then Microsoft would have had to drop it. Imagine how PO'd you'd be if a product dropped in price by 50% 3 months after you bought it?
I'm not saying this is pure fanboy pap, (which is California passive-agressive for pre-announcing the opposite) but the summary could have read:
"Gosh Microsoft - I love your product so much, take some more money from me! It's so swell you didn't get enough from me earlier - so here's some more! No no - take it! Buy yourself something pretty! What a great bunch of guys. Sniff!"
Of course - this is exactly what the base-unit purchasers are doing anyway so it's not without precident now is it?
And as far as the headline? Yes - the last time I went out on a date with the 360, that cheap whore wouldn't even split the check. It just pretended it was a non-sentient lump of plastic and wires when the waiter came around. BITCH.
Useless chunk of plastic with a smokin' power supply.
Why waste your money?
You are a cheap bastard.
Happy now?
Prof. Farnsworth - "Oh a lesson in not changing history from Mr I'm-My-Own-Grandpa!"
Can you walk in a store and buy a XBox 360 yet? I ask because I frequent Besty Buy and every time I've been there I've seen aisle of 360 accessories, but not 360 boxes. But I'm not looking for the boxes really- I just don't see them. And it seems to have been that way since the launch. Accessories out the wazoo, but no XBox boxes. Sometimes its hard to tell an xbox from an accessory. Who buys a custom faceplate when there are no XBoxes to put it on? I would hate to be the kid that gets a faceplate for christmas.
So as of today, I've yet to see an XBox 360 box in a store. And I guess I'm not the target audience for the XBox 360 anyway. I like to buy things that are available when they launch. I don't like supply problems. I have very deep pockets, and if there is something I want, I'll pay for it. Sadly, the XBox 360 didn't sell me-- it doesn't look any better than my PC and my PC was available at Christmas. And I'm still confused how anyone can play the shooters with a joystick, analog or not. It just doesn't feel right without a mouse for free-look.
Well, it USED to be a decent show when it was on tech TV. They had to add Morgan's boobies and dumb adam down to 5th grade level to make it geared more their targeted audience.
I patented screwing your mom. But it got revoked for "prior art."
Perhaps they initially decided that they could introduce enough compatibility with the 360 to negate the need. Now, with the relatively abyssmal backwards compatibility they have right now, they might consider building one. But who wants to buy a $100 3 year old tech xbox when you can get the newest one for 300? Smaller PS2's are only still selling because they're still making games for them. Microsoft should have put out a SFF xbox for christmas and held on to the 360 until they could get HD-DVD in it. Now though, it doesn't make much sense.
I guess the console is too cheap... for Microsoft. The hardware in that thing probably costs quite some more than $400. I think the big console makers are simply making a shift in business model. Lose a little on the hardware once; make a little on game licensing costs many many times.
That would also explain their paranoid devotion to keeping the system locked away from any non-signed / non-approved software, from Linux, to third-party-"licensed" games.
Besides providing a testing ground for trusted/trecherous computing, of course.
I've been noticing many tech writers talking about how the 360 is "taking the nation by storm" and "everyone has to have one," but I don't know anyone who has one, I've never actually seen one in any store, Everyone is waiting for the PS3, which will give three generations of Playstation gaming in one console and will probably be my very first Playstation purchase.
:). I have to ask -- what is it that makes you say that it will be your first Playstation purchase? So far, you know nothing about how the games will play on it, what kinds of games will be made, except that it will have Blu-Ray support, and Cell chips in it. Oh, and that it will probably cost a lot. What has the Sony marketing done to so thoroughly convince you that not only you should wait for it (instead of buying Gamecube, PS2, Xbox, or Xbox 360, all much cheaper and available *now*), but that you should also buy it when it comes out, without even seeing one?!
Well, I don't know anybody who is waiting for PS3 other than an occasional Slashdot post
This isn't meant to be a flamebait, I really want to know -- I must be missing some information about PS3!
Never underestimate the bandwidth of a 747 filled with CD-ROMs.
The real losers in all this is are the retailers who tied up whole aisles at Xmas with unsaleable Xbox-related accessories based on Microsoft's promises. Microsoft will have more trouble getting shelf space in future.
Isn't that the gist of the whole arguement? It's not much of a status symbol if Joe the accounting temp has the same unit as Bob the cfo also has.
I hope the elitist fucktard winds up in a bread line somewhere. Anybody who talks like that deserves poverty.
The REAL bad news from all of this is that I could have sold the one I won on everytenminutes.com for $6000 or $7000 instead of the crappy $5000 they were going for from other winners.
Friends help you move. Real friends help you move bodies.
Never forget: 2 + 2 = 5 for extremely large values of 2.
I'm on my first Xbox 360. It works. Flawlessly. No crashes. At all.
And if they see loads of Xbox 360, it's because before people used to bring back the consoles to the store. Nothing more.
Get your facts straight; everything here was only FUD.
Happily, GamerDad's free blog is priced perfectly for the value of the analysis contained therein.
I wonder if mine is processor upgradeable? Will it run Mac OS X 10.5?
Beauty is in the beholder of the eye.
MS would have been better with a more expesnive but better console. Not necessarily more powerful, but less noisy and less heat. I've got one of the damn things, its sits about a meter away from me and its just plain loud. The heat isn't a problem for me, but it was for other people, they shouldn't have bothered with a hard driveless version at all, yes, more expensive, but an xbox 360 without a hardrive is about as useful as a computer without a hard drive. The hard drive version as is is rather well, weak. My ipod can hold 20 gigs of data and its 3 years old, my xbox 360 should be able to hold well over 20 gigs, which, frankly, it can't.
I think he's right people were, and will be willing to pay more for an xbox 360. Right now the choice is better video card, or xbox 360 (think TES IV: Oblivion)? But that's the point, for 400 bucks US you get a video card that is on par with that in the 360, if you've got an old computer (agp slot), then you can't even buy a video card quite as good as that in the xbox 360, so you need a new Motherboard, new board means you're getting into some pretty serious upgrading.
if they'd let it either dual boot to windows XP or somethign compatible in that vein, and charged 700 bucks for it (make it so students can install mathematica/maple/matlab, and office) and market it as a replacement for a PC with no compatibility issues and they'd have done fine. But that's innovative, are at least asymmetric for the console market, lets try a different tack
If you think of the little things that are annoying about a 360:
Shitty headphone thingy, and its bloody uncomfortatble
No charger for a wireless controller
too hot
too loud (much too loud)
too small a harddrive
shoddy DVD playback
poor cable selection for some people
even though it looks like it, the console shouldn't be used in the upright position because of the heightend risk of disk scratching
Hideous power brick, which apparently in hot weather needs special attention
By themselves each of these things is a minor nuissance and would each be small problem to fix, but that costs money, making the 360 a piece of junk out of the box, and giving poor press that reflected that. They didn't need to be innovative, but a 120Gig HDD,
a decent headset, maybe a chargable battery pack for the controller and some better hardware engineering would have improved it a lot, and probably only cost a couple of hundred bucks more. A better backwards compatiblity list at launch wouldn't have hurt them either
Granted none of this addresses the core problem of the 360, whcih is that there are virtually no good games, and only a handful likely to ever come out for the console, even with XNA, which is as far as I can tell a pretty good development environment. But that's for another time.
And raise the price of gasoline again while you're at it. Only rich people and hard-core drivers should be out on the roads. Higher prices for everything! That's what we need!!
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
...the problem is that they didn't make enough of them. Duh.
Authority questions you. Return the favor.
For those of you who have forgotten, Microsoft intended for these shortages to happen. They allocated units and set pricing to make this happen. This scheme was leaked out before the 360 even went on sale. They priced and shipped it to get the headlines: New Microsoft XBox 360 Sells Out on First Day. Best publicity they could arrange.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
I agree, it was too cheap. Beacuse the ebay market price was around $800 for the premium. Where as the retail price for the premium was only $400. So lucky sellers were cashing in on massive profit margins.
:) (you could get a ipod)
Also not even considering the price set by a market such as ebay, the what you get factor is huge. 3x3.2ghz PowerPC cores, the best ATI graphics card, wireless controllers, all that for 400 bux! APPLE COULDN'T DO THAT!
The original NES retailed for $199.00 or $249.00 in 1985, depending on which bundle you purchased. http://www.classicgaming.com/museum/nes/ Adjusted for inflation, this equals about $371.00 or $464.00 in 2006 dollars respectively. http://data.bls.gov/cgi-bin/cpicalc.pl Based on eBay resales, the price of the 360 probably could have been set marginally higher and the units would have still sold out. It doesn't seem to matter now though.
Slate had a whack at this a very long time ago.
I'd rather play with a stick in the dirt than pay $400 for this junk... *Thumbs Down*
This just in! 3 out of 4 people make up 75% of the population.
Basic economics would say that efficiency for both the consumer and producer is maximized at the point where aggregate supply equals aggregate demand. Though we have the gift of hindsight, even Microsoft probably knew that the unit was underpriced for what demand would ultimately be at launch. However, here's the crux of pricing at equilibrium (in a real world setting). As the early adopters group gets their boxes, demand shifts left (or down) because the aggregate preferences of the group changes to a lower price point because the group of consumers itself has changed. Now the 360 is overpriced. In an ideal world, they would just lower the price. Well, you can't exactly do that in the real world because it would piss people off, chipping away at your brand. Sure you can do it, but it builds in distrust toward your company -- not the sort of thing you want to do when you're launching a 5-6+ year product line. I would posit that Microsoft was playing the pricing game for a year down the road, not at launch. This price point puts them in a position to battle Sony effectively on multiple fronts.
Microsoft could have auctioned off every XBOX 360 and made a killing on each unit and probably maximized their profits on the unit sales. However, they would have likely alienated the retailers of the game titles. Short term sacrifice in search for longer term profits. Nothing new here.
too cheap? Is this supposed to be a system only Bill Gates can afford? crap I have to save money each month in hopes that some day I'll be able to afford one and I make good money. This guy must have a government grant to research this and make such assanine comments. Besides in the past companies have always lost money on consoles because they make it up by selling and licensing the games. The more people who have the console the more games sold. The lower the price the more likely they will to sell them. Its a delicate ballance for any company to decide and I think 400 while still expensive as hell is a good median point for what you get. Now I just need to go out and spend 2k on a High Def 50 inch TV so I can save up for an xbox360 and have it in all its glorious High definition goodness. Then once I declare bankruptcy I can save up for some games.
I'm not even going to discuss the 360. I did for a while want an original Xbox (almost half just for Xbox Media Center, but then Front Row came out, so my interests in the console has waned considerably), but the price was always (and continues to be) way too high. I might have paid $100 for it. Now that the 360 is out, I was hoping used prices would plummet, but nothing like that has happened so far. At this point I've almost completely lost interest.
--The universe will not be altered by forum threads, even those which are very wry. --Tycho Brahe (Penny Arcade)
Why not just price the system dynamically. Shift prices once a week or once a month as the market demands? There's no hard and fast rule that MS (or anyone else) need to establish an MSRP and hold it for six months to a year.
Zonk articles suck ass. Seriously man, cut it out.
Lets look at the price from a man hours point of view (as opposed to the future value or present value). I will be using minimum wage as an example and $49.99 since that seems to be a relatively popular price point
$39.99 game with $7.25/hr yields 5.52 hours in 2006
$39.99 game with $4.25/hr yields 9.40 hours in 1997
As you can see, we are actually getting more bang for our buck considering the minimum wage back then compare to now.
Every geek has some sort of website, programming or computer project. Here's mine: www.youtasteit.com . What's yours?
After explaining how Microsoft should have charged more for the XBox 360, he pointed out to the teacher that she forgot to assign homework.
Mike van Lammeren
It will challenge your head, your brain, and your mind.
Gamespot: What grade do you give Xbox, version one, in the area of marketing and advertising?
Peter Moore: I'd say a B. One of the things that probably stopped us from being an A- is, [even though] we created a very cool and aspirational brand, we need to broaden the appeal of the brand. Not losing, or disenfranchising in any way, the gamers that got us there today--which is always a marketing challenge--but we have to grow.
But at the same time, we need to make sure we continue to talk to the more hardcore gamer, the early adopters. That has been an important part of our success, and we fully intend to do that. At the same time, we need to provide an even more approachable feel and tonality to the brand, and we need to do things differently.
sure they could stop dumping 360's. but that would provide a bit more oxygen to the adversaries now wouldn't it?
Look, using inflation to justify your argument doesn't always work. The cost of living has gone up, and there are new technological advances that now steal your money. Widespread cable and internet access are things we didn't have to pay for in the past, but we almost need to do now, because of how we now live our lives.
To say that the 360 is cheaper than the NES is technically accurate, but ignoring every other aspect of past and modern living. It's all relative.
They knew they their main problem would be selling. You might remember that the shortages were intentional. It's the only way they could create buzz for such a third rate product. M$ is all about market share, and they are deservedly still a trailing third or fourth. No one has been fooled, despite massive Astroturf, marketing and supposed losses producing and promoting the garbage.
This article, blithering about "premium" prices, completely misses the point that the Xbox was never excellent. It's just more BS marketing from the kings of pushing second rate stuff.
Friends don't help friends install M$ junk.
This article is written by Dave Long, and if you read a few of his articles you'll see a definite anti-MS slant. So, I'd take what he says with a large dose of salt. Also, he flipped flopped on Xbox Live and now begrudgingly admits that it's actually a worthwhile service. Same thing with the 360. He likes to bash Microsoft with one and and yet grab their gamepads with the other.
It makes me sad to know that Microsoft did not maximize profit potential on the 360.
Bill has built up such a nice little company and it would be such a shame if it went under because of this.
I think that this has got to be the most commonly uttered silly thing in these threads, and that is a high bar to set. At first, it had the hint of plausibility; positing that the first week or so of shortages would generate hype, especially for the Christmas season. When the Christmas season came and went with almost no product on the shelves, that pretty much shot down this argument. Face it, Microsoft wants to sell as many boxes as possible because each box sold makes it harder for their competitors to come in later and sell another box. There is absolutely no way that Microsoft would have wanted to miss all of those potential sales in 4Q 2006. It just doesn't make sense to miss the biggest quarter of the year, when your competitors don't have a product in the market, just to generate some ephemeral hype. The much more sensible explanation is that they just had problems somewhere in the supply line.
The 7 or so people that bought one all agree that they paid enough.
im NOT going to buy one because they cost $800 NZ! thats rediculis just to play some games!
I agree that people have more money to spend on game consoles in general, however I think Microsoft's price of $399 for a new console was adequate. Also, what you need to keep in mind is this thing called "market share". With a high priced release for PS3, no matter how nice and pretty the graphics are, Sony must retain its dominant market share. Market share is everything to Sony. This is the reason why so many 3rd parties flocked to PS2. This is why I think it is more important than ever to release a new console at a reasonable price compared to the competition. One more factor to weigh is that both Microsoft and Nintendo appear to have a better clear overall strategy this generation. Both will almost certainly have a better share of the market this time.
"The Dreamcast went under because people found an easy way to pirate games. "
Utter revisionist tripe.
The "easy" way to pirate games was only discovered after Sega was in serious trouble with Dreamcast.
The truth of the matter is that Dreamcast had a great lauch, but Sony froze the market because they implied their PS2 was miles better and just around the corner. As it turned out, the PS2 was marginally better, and significantly more expensive with worse games. But Sony had the name.
So let's be clear... The PS2 killed the Dreamcast.
Piracy didn't play any role as almost no one outside 16 year old boys with too much time knew about the cracked/pirated games. And certainly not enough people had broadband at the time to make it viable to download 800M ISO's even if they had.
"MS could have had a much more effective launch by sellng a single $350 unit"
True, but MS wanted a console they could claim was $299. It was clear from looking at the pricing that the "basic" unit was just to get you in the door; the component cost of going from the "basic" to the "deluxe" was so high that most people were going to spring for $400 even though they only intended on spending $300.
You were mistaken. Which is odd, since memory shouldn't be a problem for you
especially given the early demise of the original Xbox
What does this mean?
I haven't owned a console since forever and rarely play them. But all my friends that play consoles they only play the xbox.
Did the XBox get its butt kicked and I am just seeing an anomaly?
NeoGeo was around $500 when it was launched. It was relegated to the arcades. Very few people actually ever owned it as a home system. This might have been different today, but we're supposed to learn from history, right?
The author of this posting put so little time into thinking about his own question and the implications involved with it that it's an embarrassment this post ever made it up.
...At which point it'll be "time to buy" for the rest of the population just as the PS3 comes out. And then guess what, then the average buyer might just say "hey, screw Xbox360 I'm going to pay another hundred and get the hot-hot-hot latest-technology PS3, i'm no sucker!". Get them early and then instead of buying the competition's console, they already have yours so their basic-need is already satisified. Business is a game not an equation. The time advantage was huge and they executed properly.
Without even delving deep into why it was priced as-was: PS3's coming out. Timing. Microsoft wants people to have their box on their cabinets *now*. Not just the gamers, they want to take over so that when the PS3 comes out, they will have already built up a market of people with their console. *Not*, jack up the price to get all the hardcore gamers, then have their price be lower later.
When I saw the headline I thought "360? But that's OLD technology - they can't still be around, can they?"
Then I twigged.
The *really* sad part is that 99% of you young whippersnappers out there won't have a clue what I'm talking about. (Hint IBM)
I'm now going to take my bathchair for a spin around the block.
Ok, where is your proof of this claim then?
j apan.nintendotarget/index.html
m irror/news/0108/n23r.html/
Where is the proof that Nintendo hasn't ever sold the Gamecube at a loss? It's nothing more than Nintendo fanboy mythology, as Nintendo has publically stated at least twice that they were taking losses on the Gamecube hardware.
May 24, 2001
In the GameCube business, industry specialists estimate the company will lose 5,000-10,000 yen per console, each carrying a 25,000 yen price tag, at least for the first year.
http://archives.cnn.com/2001/BUSINESS/asia/05/25/
Spaceworld 2001
We expect to incur a small loss on the GameCube hardware initially, and you're right that it hasn't been our habit in the past but we expect it to turn okay early next year. - Peter Main, Nintendo
http://terror.snm-hgkz.ch/mirrors/www.thegia.com/
January 14, 2004
Perrin: I would say that our losses are really negligible. It's such a small amount. Plus with the amount of software that's being sold we're still definitely in a solid profit situation.
http://cube.ign.com/articles/463/463155p2.html
There is no excellent beauty that hath not some strangeness in the proportion. -- Francis Bacon
And they got so much "free" publicity out of it that people are still talking about it today.
They wanted the units to be a "sell-out" it sounds impressive, it makes it sound "hot" and the "latest thing"
Dropping the price later would create a different effect, their next product launch wouldn't sell as well becuase peopel would anticipate a drastic price drop.
I was 14 at the time, and I saved up for probably close to a year to get my Atari 2600. If you figure out how much money that was in today's money, that would probably be around $400. When you change the percentage of my income, it's more like $5. (Where's a good inflation calculator?)
I've not bought an XBox 360 yet. I sold off my XBox sometime last spring, just because I'd realized it had gathered more dust than I was happy with, It had been enough months since I'd turned it on, and modding it so I could play with it as a media center was more money, and f** with factor, than I wanted to sink into an old platform.
with the marketing of the 360? Curious, because based on the way I read your words you appear to have been privy to the actual decision-making within MS. Were you?
Hell, IMNHO, anything over $250 for a console is WAY too expensive. As it stands, the likely prices of the PS3 and the price of the XBOX360 I could build a decent x86 system with at LEAST equivalent power. ...and my how quickly we forget the 3D0 and whatever that other late 80s/early 90s console with the $250 cartridges, oh my, what successes they were.
Of course my biggest gripe now is that i want CONSOLE games on my console, and PC games on my PC, not what should have been PC games forced onto the console first then crappily back "ported" to the PC. Look at Oblivions ultracrap UI, it's almost as bad as Gothics(which reminds me of early 90s RPG interfaces) and was obviously designed for console controllers and TV screen readability. Bethesda should really have spent the small amount of time and money to overhaul the UI for the PC version, especially considering that they took and extra 4 months to release it. (Thankfully modders are doing what they can for the UI in this case, but not every game is as moddable as Oblivion... also the UI wasn't the only portion of the game to suffer from XBOX targetting...)
i.e. I want Final Fantasy MXI on the PS22 and TES 55 on the PC x86-1024, but I really expect to see separate consoles to go away as such, and hope that future games don't continue to be dumbed down to what were console level games. (i.e. quick and simple, or fairly linear but long adventure/RPGs, sports games also tend to come out better in the console format anyways as they really play better for some reason on consoles, or such has been my experience over the years(Football, Hockey mainly PC controllers weren't really all that great for generic gaming untilrecently, although flight sims and racing sims tended to go out of their way to support every oddball controller, or specialized controller systems...)
The huge difference that the XBox360 and the PS3 have over any other console, past or present, is that they aren't really intended to be JUST gaming consoles. Both have aspirations of becoming the major entertainment hub of the living room. This isn't about gaming consoles anymore. The original XBox delved into this area, but no more than a standard PC would have at that time.
People are going to be willing to pay $500 for a PS3 if it has the BluRay DVD player that will play BluRay movies. While Microsoft needs a price edge over Sony from the initial launch of the PS3 in order to survive.
Microsoft has talked about an HD-DVD add-on or redo of the system sometime this summer.
The only company that is interested in making a console just for playing games is Nintendo. They don't want an all-in-one computer like device to run the living room. They just want to make great games.
Buying into Micro$oft as your gaming platform will only cost you your soul.