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."

Re:Yes...

[Anonymous Coward]

but Microsoft went from 0% market share to beating out Nintendo's Gamecube

Hmm, the original XBox sold the same number of units as the Gamecube, give or take a million.

The gamecube was 100% profit from the day of release as well. If the XBox hardware ever made a profit it wasn't for a couple of years after release. I suspect it never did. Nintendo reported solid profits all the time, Microsoft spent how many billion? The gamecube did worse than expected, yes, but I put that down to poor advertising on Nintendo's part, a large 'kiddies console' outlook amongst the USA and Europe that was unfounded but is now far less prevalent and various other factors.

This is a new and interesting meaning of 'beating out' I've not run into before.

XBox 1 prices are going up

[Anonymous Coward]

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.

Re:Mod article -1: stupid

[carbontetra]

The xbox 360 is still a toy. It's a dedicated machine to play games, and it's still a large chunk of money to drop on a dedicated game machine. Whether or not they do the damage to a pc instead is irrelevant to this discussion. It doesn't change the fact that $400 is STILL a lot of money to drop just to play some games, whether it be a game system or a video card.

Re:Reaching

[ILikeRed]

Please stop saying this falsehood - most game consoles have NOT been sold at a loss [actsofgord.com]. And the only reason MicroSoft can do so is because of the buttload of money they get from their OS and Office.

Inflation?

[Cyno01]

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.

Re:Yes...

[joshsisk]

Japanese Hardware Sales Chart, 3/20-26/2006:

1 DSL: 119,986
2 NDS: 39,307
3 PS2: 34,169
4 PSP: 31,077
5 GBASP: 5,627
6 GBM: 4,883
7 GCN: 1,458
8 360: 1,415
9 XBX: 108
10 GBA: 98

The 360 fails to outsell the Gamecube, and the original Xbox barely manages to beat the ORIGINAL Gameboy Advance. source [joystiq.com].

This isn't a fluke, either. MS is really taking a pounding in Japan, which is a big deal since so many gamers LOVE japanese games.

The real world problem of equilibrium pricing

[hepstah]

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.