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."

Comments

Reaching

[AKAImBatman]

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.

Re:Reaching

[Goyuix]

The other assumption is ignoring the market reaction six months later when they cut the price back down to $400... lets say they really ramped up the price to an even 1K - which is what some systems sold for on eBay, using that argument - How many customers would just happily wait the six months for the system to drop back down. Yes it may serve to stave off the out-of-stock problems, but you are just going to aggravate your consumers and at the end of the day - not to mention store owners paying the inflated price, only to have MS cut it in half and deal with that hassle. The real answer is to launch when your inventory and production are sufficient to handle the demand. This is a fine point of launching a device in Japan, Americas and Europe at different times - it really helps the inventory problems. Not that I like waiting, but there is a WHOLE lot more going on than MS simply missing out on an opportunity to fill the cash bucket.

I really can't believe I am feeding the troll of this story.

Re:Reaching

[Serapth]

ARRRRRRRRRGHHHHHHHHHHHHHHHHHH

I see this reference everytime mention of selling a console at a loss is mentioned. Hey, I love the Gord. I wasted many many many days at work reading the Gords awesome website.

That said, when the hell did some guy that owns a video game stores commentary become "the truth".

The Gord said it, thus it is true! And you know what... some guy at EBGames once told me that EA fired all its programmers and replaced them with monkeys. I thought this was insane at first, then it dawned on me, he works at a game store, it must be true!

Re:Reaching

[oGMo]

The Gord said it, thus it is true! And you know what... some guy at EBGames once told me that EA fired all its programmers and replaced them with monkeys. I thought this was insane at first, then it dawned on me, he works at a game store, it must be true!

Except Gord isn't an idiot, and he goes on to make a good case for his speculation. It's pretty simple math; read the article. If Sony lost $100 on each of the 1000000 consoles it sold at launch, it would be pretty damn hard for SCE to sweep a $100mil loss under the carpet. According to wikipedia they sold around 10 million in about 2 years; how do you hide a $1 billion production loss? You don't; billion-dollar losses are more Microsoft's area.

Microsoft would have made more money

[Threni]

> 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.

Yes...

[bssteph]

...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.

Re:Market forces

[wileyAU]

Microsoft obviously failed to find the appropriate point on the supply/demand curve for the market.

Consoles always make their money from selling games. Microsoft intensionally sold below the market curve for consoles in order to drive the sales of games which are priced about $10 higher than new PS2/X-box games.

Re:Pre X-mas prices on Ebay

[MyGirlFriendsBroken]

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.

I would disagree as it is about the price drops. You have to wait a certain amount of time before dropping the price, so your initial price point has to ensure sales for about a year say, not the first couple of months. Remember to original Xbox, when MS had to drop the price of that after a few weeks (which happened in the UK, I don't know about elsewhere), they had to give all of the people who paid they higher price accessories and games to compensate and smooth over the PR.

So Xbox 360 are in short supply to start with, but they get:

1) The hype of being sold out.

2) Good will amongst many customers outside the US, at least many more of us had a "chance" at a bite of the cherry..

3) A price which will last them till the PS3 comes out when they can drop the price without aggravating those people who already have one.