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Microsoft Readies Cheaper 360
Officially Microsoft is putting on a brave face, saying they won't drop the 360's price even in the console's weakest market: Japan. Just the same (probably in anticipation of Sony's PS3 price drop), the San Jose Mercury news says the company is secretly working on preparing a lower cost Xbox 360 SKU. Called 'Falcon', it's a cost-reduced system using 65nm chips instead of the at-launch 90nm electronics. This ties right into Michael Pachter's expectation of such a cut; it should be noted he doesn't see the DS or Wii prices moving any time soon. Related to all of this, Newsweek's LevelUp blog has two great interviews today: a Peter Moore discussion harkening back to last week's warranty announcement, and a chat with Jack Tretton about the price cut and the 360's hardware issues.
If they redesign to use 65nm, and the end result is a 360 that runs cooler and doesn't need to blast the fan as much, I might consider replacing mine with one. But it would need to have the same hard drive space (preferably more) than the current non-Core system.
To be honest the fans on mine aren't so bad, it is fairly noisy, but kind of to be expected considering it is such powerful hardware in a small box. But the real issue is the DVD drive. Mine sounds like a jet taking off, non-stop, whenever playing a game. It's actually quite nice to play demos downloaded to the hard disk, as the console seems whisper quiet in comparison.
Fortunately I haven't yet been screwed by Microsoft on my purchase of the XBox360. I had a launch unit that was locking up, but they replaced it for free and since then, no issues what so ever. I don't think every 360 unit is bad, but yeah a lot are.
So, I might be 'stupid' but I didn't get screwed.
That would be "as fast as they decide to ship them".....I don't really think that they can "only" produce a handful of them.....stores around here are still constantly sold out getting small shipments periodically. Not saying they can't be had, but that I think they can make them faster than they are right now.
Of course, this delay does a couple of smart things:
1. Maintain high demand so that price cuts aren't necessary.
2. Delays production of units so that component parts become cheaper -- thus reducing the loss (or increasing the margin?).
Layne
Am I the only one out her that is sick of the 360 and PS3 coming out with different systems? I feel that if I buy a 360 or PS3 now it will be a mistake and they will have a new version out in a year that has a 200Gig hard drive and folds my laundry. I want a next gen system that is set in stone where I am not going to feel like I got riped off in a year when they tweak it again.
The funny thing is, I know plenty of people with working launch boxes, but I know plenty of people with boxes bought during the summer of 06 that are breaking frequently. Considering that they have issues with chips popping off boards and bricking the systems it makes me wonder if these issues are caused by removing the usage of lead in solder to comply with RoHS and bad planning. The company I work for is having major issues with chips popping of BGA connectors because the silver solder is so brittle. We didn't have the issue with lead because it can handle the flexing.
Just because a hardware revision introduces cheaper components doesn't mean they are lower quality, just as expense doesn't imply quality. They could have come up with a design that is more reliable and cheaper to make. Improvements could have been made to current parts that make them cheaper. It happens in every console generation. Also as stated above, Im not convinced tis a component failure as much as it is a connection failure. Partly because they manage to send out old boards so often. The problem can't be that extreme for them to be able to reuse old boards. If Im right and it is something as simple as they don't have a good solder then who knows how long it could take.
You mad
The built in power supply would be a nice benefit, and use a quieter DVD drive and I'll get one. Built in HD-DVD would be nice, but not many people would want it, and the addon HD-DVD drive is already under a $100 at some places, very smart not including HD-DVD from the beginning.
What other features could they build into it with the added room of smaller components? No one really thinks its too big, so changing the case probably isn't a good idea at this point, although it would be nice.
Actually, I would argue that the PS3 has more than Blu-Ray going for it - HDMI 1080p output (just bought my 46" 1080p TV this week and I'm completely blown away), 802.11g wireless, and a guaranteed hard drive - which helps with games like Oblivion and GTA which need heavy caching. Add in the nice stuff like the media server integration (streaming music wirelessly from my linux server to my PS3 works really well), PSP remote play if you have one (I do), web browser, and the ability to install Linux and you have a really nice machine. The thing for me isn't just a nice gaming machine - when it's all said and done I'm going to have a nice media center going with an BluRay movie player, 46" LCD, surround sound, my computer through the LCD for development, and the wireless keyboard and mouse. Is it worth the money for me to do this? Yeah, I like it. Are other people looking for this? Probably not. But the PS3 really is probably the sweetest setup you can get for total integration in the living room. I guess I'd rather have that then just a decent gaming machine.
This really doesn't make economic sense.
Sure, after a while the prices of parts comes down. But in the meantime you've lost sales and market share to the competition. And since your revenue is dependent on game sales, this is only shooting yourself in the foot.
Furthermore, you get bigger discounts on parts when you order them in larger lots. So anything you might save is lost by buying in smaller quantities.
Finally, there is some truth to the idea that a modest shortage can help spur customer demand, but within limits. Too much shortage and people turn to the competition.
Nintendo claims that their problem is that they've contracted out manufacture and can't ramp up production as easily as if they had their own production lines. I don't think this is the entire story. There's tons of contract manufacturing capability in the world, and the Wii uses standard, mature (and therefore cheap) technologies. This has been going on long enough that they could have brought other manufacturers online if that were the only factor.
I suspect that the inability to ramp up production is related to the Wii's low price. It is certainly not the case that they could not have brought more production capabilities on line by now, but it may be that they can't build more at the price they need to build them. They may have structured their deal with Foxconn (the OEM) in such a way that it is cheap but not scalable. For example, they may have agreed to limit the number of units to a degree that can be produced by certain slack resources at Foxconn, that are otherwise engaged in higher margin work.
I'm talking through my hat here, since I know zilch about manufacturing. But I'm reasonably certain the problem is that they can't scale their production at the price they want to sell these things for. If they could, then they would, maybe not enough to keep everybody's shelves stocked to overflowing, but enough so that you'd consider driving around to find one. My son wants one for his birthday coming up, and I told him that while I'd be happy to shell out the dough, there was no way I'd spend the time it would take to track one down. They're losing market share to the competition because of situations like this.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
I don't think that Nintendo is sitting on a ton of stockpiled Wiis, but it isn't inconceivable that they could be stockpiling some for the holidays. There are some very significant reasons why holiday console sales are more important than sales during other times.
First of all, console makers have to convince publishers (and consumers to an extent) that their console is doing well and people tend to use holiday sales as a measure of a consoles health. If Nintendo shows any weakness during the holiday season they could cause publishers to lose confidence in them.
Second of all, some consumers may only be likely to buy a console during the holidays so if you don't sell it to them this holiday season you may not get another chance to get them to buy it until next holiday season. Or worse yet, they may buy another console and stop considering your console completely.
I also have a hunch that the attach rate for holiday sales is much higher which would mean that holiday sales are actually more profitable (or at least more profitable in the short term, long term it probably evens out). This seems like a reasonable assumption to me, but don't quote me on that.