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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.
they should focus on getting the HD-DVD right in a cheap package for the sake of killing blu(e?)ray. The Xbox 360 elite seemed to be a bit of a screwup making a slightly nicer new console and ruining the price advantage with the ps3 without much extra. Still you'd imagine this *has* to happen with more cost-effective building because even though the 360 is a very nice console they're still losing a lot of $ on the bottomline.
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.
Imagine the losses Sony endures after they cut their price with additional $100. And now the competition leaves them in the dust again. Let's say MS puts the price with $50 down (let's be conservative right). Note, the prices have been de-retardified for better comparison:
Wii: 250 usd
360: 350 usd
PS3: 500 usd
And the killer feature for each console:
Wii: totally new way to control games
360: the best online gaming experience of all consoles
PS3: Blu-Ray
Notice: PS3's killer feature isn't gaming related one. One reason gamers aren't very excited about it...
A price cut is not expected for the wii because it's still selling as fast as they can make it! Microsoft and Sony are having trouble moving stock at this point, so a price cut makes sense for them.
$rant = "Stop using SKU in everyday conversation."
For those of you who need it spelled out, run this at the command prompt: perl -wc split ('', $rant)
The correct term is 'model'.
Back in May there were articles floating around that Microsoft expected the Xbox division to be profitable in 2008. However, they've recently decided to offer an extended warrenty to customers in order to deal with the high failure rate of the Xbox 360. An earlier Slashdot article has this estimated to cost Microsoft around one billion dollars.
The earliest reports pegged the Xbox as costing about five hundred through seven hundred dollars to manufacture, a loss of a few hundred dollars on each console sold. This article published around the time of the PS3 launch puts the cost of Xbox 360 components at around seventy dollars under the final unit cost (manufacturing and other costs were not calculated into this figure so it may be safe to assume that they were breaking even or close to it at that time).
With the costs of the new warrenty (in addition to any costs that can be associated with the honoring existing warrenties to cover the high failure rates of the console) and cutting the price which changes the profitability on each unit sold, when does Microsoft now expect their Xbox division to become profitable?
Economically speaking, the Wii should see a price increase of $50-100, which brings it in line with the eBay price (which is roughly the true market price), thus stopping the shortage. However, the effects on long term customer goodwill probably wouldn't be worth it.
Not a typewriter
I got my 360 Premium brand new from Micro Center for $300 almost a year ago. Since then that sale's been running on and off non-stop. How is $250 half the price? It's $50 less... and for a console with fewer games and pricer controllers (I'd need the nunchucks) I don't see it as that big a bargain. I'm not saying a price cut is in order by any means, but I never saw the Wii's somewhat lower price a huge selling point for myself (though then again most people look at $9.99 and think it's much cheaper than $10.00).
I like basketball!!1!
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.
And your prediction would probably be wrong. They are STILL having trouble keeping the Wii in sufficient supply on the store shelves in some areas, so why lower price? It's the basic principle of supply and demand. If supply is too much and demand is weak, lower the price to change the sweet spot on the supply demand curve so they are more equal. The wii is not over-supplied (yet) and there is still sufficient demand, so lowering the price would be a stupid move for Nintendo.
At this point i'd say the 360 needs to do a $50 price drop to really keep the edge against Sony in the console wars. They are probably a lot closer to producing not at a loss at this timeframe in development too, so they should be able to afford a $50 price cut. I think Sony will be losing even more money as their manufacturing surely hasn't dropped in price that much from when they launched last fall.
"To strive, to seek, to find, and not to yield." - Tennyson
How did Xbox 360 customers get screwed? I just got a free 3-year warranty on a machine that functions perfectly-- not my definition of "screwed."
Comment of the year
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.
Why is it considered a given that Nintendo will not enter into this price war?
Companies drop prices to increase sales. Since launch, Wiis have been selling as fast as Nintendo can make them, with no signs of that letting up. Lowering the price would just mean less profit for Nintendo.
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 360 "Elite" didn't fix the reliability issues, what makes anybody think that this new version will be any more reliable? Microsoft has had 20 months since launch and they still can't ship reliable consoles.
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.
If owning a 360 that had 0 problems, just got a free 3 year warranty and is something that I enjoy playing on a daily basis for 4+ hours of my leisure time (which is more attention then I give to my Wii, or PS2, or any of the other consoles I've ever owned) is your definition of "screwed"; well then I guess I've been throughly screwed...
... sounds like you're bitter because you haven't been screwed.
Collector's Edition
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.
As someone who has a 52"HD TV and has both the GameCube and the Wii, I can assure everyone that the Wii's graphics are better than the GC. The Wii provides a very clean 480p signal from it's component output. I have GC games that turn on more effects when played on the Wii, so Gamecube games actually may look and run even better on the Wii. Nintendo's current hardware is very compact, quiet, and uses little energy, unlike other consoles I own. I find the graphics a Wii or a GC produce are far from "terrible", and often are more pleasant than the graphics produced by higher resolution systems, especially PC's.
Or rather, she did until I started catching her falling for it... "Hey, can we get this, it's only $7?" "Actually honey, that's $8, it's $7.99. And once you add in tax, it'll actually be more like $8.75."
"Life's short and hard, like a body building elf." -- The Bloodhound Gang
Well, I do recall that the PS1 was specifically priced $100 less than the Sega Saturn, and that the price was announced specifically to screw Sega.
Wouldn't surprise me if they had to drop the price early to follow a desperate Sega drop...
Vintage computer games and RPG books available. Email me if you're interested.
As I understand things, Nintendo is not in the business of actually manufacturing hardware. This separates them from companies like Sony.
The Wii is currently being manufactured under contract by a company called Foxconn. My bet would be that the contract only allows for so much of a manufacturing ramp-up without having to renegotiate terms, not to mention any physical production limits Foxconn may run up against. At a certain point Foxconn has to do its own cost-benefit analysis and decide whether or not it's worth creating new manufacturing plants or delivering late on their other contracts in order to meet a demand from Nintendo that is almost certainly going to fall off in the future.
yeah man... it's lacking so many features people are having to buy twice as many Wii's and PS3s to make up!
that must explain the sales numbers.
(yeah, this'll ding my karma, but it was totally worth it.)
He posts anonymously on /. with his elitist attitude about entertainment, and that makes him mature.
Some people enjoy pointing out how "immature" or "childish" someone else is, or their choice of entertainment. Generally, in conversation, these people also point out how mature they are all the time -- it's insecurity, like those homophobic wankers who point out how "gay" this or that is all the time. Basic projection and insecurities.
To me, it's a true sign of creativity to make something enjoyable by different ages. It's very hard to make something that children can understand and enjoy that also captures the attention of adults. Anon probably hates on Harry Potter*, but it's "immature" entertainment that many people of varying ages enjoy. The Wii does this: People of all ages enjoy it. It's not aiming to be the same as other consoles. I think this pisses off fanboys of other consoles, like the Anon in this case.
Simple fact is, the Wii is selling, despite not being the elite graphical engine in the bunch. Because it appeals to a larger audience than the PS3 or X-Box (at the 1 year mark, see where the Wii stands compared to the 360 and PS3 sales -- November isn't that far off...). This doesn't mean the other consoles are bad (though I dislike Sony and think they really screwed up this generation), just different. Some people are just weird and have to hate anything that competes with their precious. Anon is, with all probability, a rabid Playstation fan who is extremely pissed that the little old Wii is kicking the snot out of the PS3. It's no longer "in" to hate on Nintendo -- grow up.
*I've never read a word of Harry Potter, myself, but I don't hate it.