The 360 Is Too Cheap? 291
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."
Oh no! (Score:5, Funny)
Reaching (Score:5, Insightful)
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.
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If you hadn't bought a PS1 when the PlayStation2 came out, would you spend some more, and get a console that could play most of the old games as well as the new ones (once they drop in price)? You might if you're thinking long term.
Of course MS's idea of "backward compatibility" is a joke, but the average consumer might n
Re:Reaching (Score:5, Interesting)
so in reality, a large number of units went for far more than the $400 price. i.e. The market self-adjusted the price. Microsoft may not have seen the profits, but that wasn't the point. Microsoft is selling the console as a loss-leader using the "razor blade" model. Advertising the system to be more costly would reduce demand, and thereby cut profits for Microsoft as fewer games got sold. With the lower MSRP, Microsoft was able to generate not only demand for games, but also buzz about the system. Buzz leads to more system sales (in the future), and more system sales can lead to more game sales. More game sales == more profit.
And that's without assuming that Microsoft isn't using its resources to undercut the competition in an attempt to monopolize the market.
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Sure, you can say that they simply did far better than they expected, or that the shortages were intentional. But do you realize how many games you have to buy to justify the difference between 400 dollars and 800? My napkin math suggests somewhere between 8 and 20, depending on how much of each sale goes to MS. And this doesn't even include the fact that people who bought that JC Penny package still presumably wanted to purchase a game or two for it!
Re:Reaching (Score:2)
Otherwise, I agree with everyone, these are big reaches.
RonB
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The problem was that the price and their launch inventory/capacity were badly out of whack which suggests that one of three things happened:
Someone messed up ($50-$100 million is a pretty expensive mista
Pre X-mas prices on Ebay (Score:2)
I think that's what they wanted (Score:5, Interesting)
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.
Re:I think that's what they wanted (Score:4, Insightful)
The original author claimed MS could have raised prices. The top-level comment poster disagreed. I argued back that high ebay prices showed what the market was willing to bear at that time. Your reply to me that they needed 'to get more consoles out there' is both true and irrelevant given what was available in the channel at that time. Are you arguing that MS could not have lowered the price once production increased to the point where the supply shortage ended?
Re:I think that's what they wanted (Score:2)
That is part of the O.A.'s argument. It is the part that I agree with.
The other part is the assertion that it was a mistake for Microsoft NOT to have raised prices. I don't know that to be the case. Regardless of MSRP, the Xbox 360 WAS the "hot" product of the 2005 holiday shopping season. I'd assume Microsoft's leadership is pretty pleased with that, even if some middlemen did take home some profit that theoretically could have been theirs.
Re:I think that's what they wanted (Score:2, Insightful)
Re:Pre X-mas prices on Ebay (Score:5, Insightful)
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.
Nope: try 40K units by 12-5-05 (Score:4, Insightful)
Re:Nope: try 40K units by 12-5-05 (Score:2)
My guess is probably xbox version 4 where you buy the console and activate the OS on the console.
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I really can't believe I am feeding the troll of this story.
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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 (Score:5, Insightful)
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 [wikipedia.org] 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.
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Nowadays I'm impressed by new systems for about half an hour before the novelty of the graphics wear off and I'm wondering where the gameplay is at. I'm hoping by the time I have kid
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I was staring at Morgan Breast's Webb.
Er, Morgan Webb's breasts...
Seriously, silly banter aside, the reviews are quite good in that they seem to know how to use a 5 point Likert scale. Most of their reviews are a 3/5. The distribution of many of the other reviews I see seems to be bimodal - the game either totally sucks, or it rocks "TO THE EXTREME!!!" At least I know that when I watch Xplay if they give a game a 1 it must really suck, and games good enough to earn a 5 are equally rare.
x-play (Score:3, Interesting)
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Which is correct. The 20-30 bracket is a gold mine for gaming companies as you have young single adults with lots of disposable income. And they love to buy this stuff.
"I'm sorry, did he miss the $400 price tag?"
I didn't. When I saw it I did a little math in the back of my head: a PC rig that does those kinds of graphics (with 3 cores) would run a
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The first false assumption that you make is that the most consumers are CAPABLE of building a custom rig for around that price tag. We often taken that for granted here because most of us have the skillset necessary to do this; many people would have no clue how to do this. But wait why not have a friend do it? That may incur more cost and certai
Re:Reaching (Score:2)
Microsoft would have made more money (Score:4, Insightful)
Pure speculation, your honour. They'd have made more money per unit, certainly. That's about all you can say.
Re:Microsoft would have made more money (Score:2)
Aren't they selling these things at a loss? So with a higher price tag, they would have lost less money per unit. And less money total as well.
Re:Microsoft would have made more money (Score:2, Insightful)
Re:Microsoft would have made more money (Score:2)
He's right! (Score:5, Funny)
Re:He's right! (Score:5, Funny)
And keep in mind, the 3D0 was SEVENTY BETTER than the 360, hexadecimally.
Re:He's right! (Score:2)
The article is junk. MS did exactly the right thing by pricing it where they did, any higher and they'll lose customers due to the fact that they reduce prices on a schedule and people will wait, which potentially cripples the market.
They need instant demand, and the best way to do that is to release something at a reasonable price.
1,000 units @ $1000 = $1m
10,000 units @ $400 = $4m and 9,000 more people seeing your products and buying your games.
Re:He's right! (Score:2)
but still... if it costs you $300 to make it my numbers above make more sense...
1,000 units @ $700 profit = $700,000
10,000 units @ $100 profit = $1,000,000
point is, you make it up in volume or something...
Market forces (Score:3, Funny)
Microsoft obviously failed to find the appropriate point on the supply/demand curve for the market.
Re:Market forces (Score:4, Insightful)
Re:Market forces (Score:2)
Re:Market forces (Score:2)
How do you predict demand?
For that matter, how do you predict supply, when you're sourcing hundreds of components from all kinds of different manufacturers?
Microsoft guessed, and guessed wrong.
If you can predict demand, you can make a shitload of money. It's not easy.
Yes... (Score:4, Insightful)
*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.
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Re:Yes... (Score:4, Interesting)
That's not the point. Any moron is able to do that.
The tricky part is to actually get your money back and a profit on top of it.
Even Microsoft cannot continue to lose money forever on XBox. This is not software, keeping the XBox alive costs a lot of money and things don't look that great for XBox360:
The shortage excuse is over (Microsoft claims that they want to produce about 1 million/month) but they sold less than 200 000 in the US in March (IIRC 197 000), since they sell less in Europe and nearly nothing in Japan, that would be a total of maybe 350 000 worldwide, 400 000 if we are very optimistic. Not even near the million they want to sell. And given the fact that the launch-hype wears off and the PS3 is coming, I guess they will have a very hard time even repeating the XBox1's performance when we are talking about sales. (So far they sold roughly about half of what they sold during the XBox1 launch during the same time frame.)
To put it in other words, they already need a small miracle to repeat the XBox1 "success" and they would still be miles behind the Playstation-franchise.
Re:Yes... (Score:2)
Microsoft lost around $20m on the XBox last year. They lost $500m in a lawsuit that they wrote off as the cost of doing business. They have several billion dollars in the bank, and make approximately $2.5bn profit every year. At this rate, they really could afford to just keep throwing money at the XBox. In fact, they could afford to sell them for $200 each, even if it meant they made a $40m
Re:Yes... (Score:2)
Maybe not forever but for the next thousand years or so should not be a problem for them at all. MS has a monopoly on operating systems and office software so they are able leverage their profits from those products to "dump" other items on the market. As long as they maintain their monopolies they can continue to dump xboxes on to the market forever. They could even afford to give them away if wanted it.
Re:Yes... (Score:2)
Re:Yes... (Score:3, Insightful)
How does MS get these new units to the market, teleportation? March wasn't going to show this lack of a shortage because the consoles weren't for sale yet. Shipping via boat takes at least a couple weeks, m
Re:Yes... (Score:2)
Also, last time I read (a few weeks ago), XBox to this date is still only a couple hundred thousand units ahead of Gamecube in sales AND NINTENDO MAKES MONEY ON EVERY GAMECUBE AND MS LOSES MONEY ON EACH XBOX.
What makes the PS3 worth the wait? (Score:3, Insightful)
Well, I don't know anybody who is waiting for PS3 other than an occasional Slashdot post
Re:Yes... (Score:2, Informative)
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.
Re:Yes... (Score:5, Interesting)
Nintendo made SHITLOADS more money than Microsoft on their console businesses'.
What was your point again? That in the US, if you spend 10 times the amount of another company on advertising, even if the other company comes from Japan and you're the richest company on the planet, you can eek out selling about a million more units than your competitor (while losing to the winner by more than a factor of 3)?
Is that it? You'd be fired on a good day at any of these three companies for analysing their respective performances in the market that way. Nintendoheads? Thats so cute, attacking a bunch of ditto-heads with a similar ditto-head moniker.
Sony won the console wars. Microsoft lost it in a big way, in so far as their shareholders are concerned. And Nintendo kept quietly making hand over dollar wonder what all the fuss was about.
Re:Yes... (Score:2)
Mod article -1: stupid (Score:3, Interesting)
Re:Mod article -1: stupid (Score:3, Insightful)
No, this is a 400 dollar alternative to buying some kid a kick ass machine with a 400 dollar video card to play games on. The alternative to this alternative is to let the 12 year-old-know-it-alls beat up on mom and dads PC installing every demo that comes down the pike as well as all the crap the accompanies the demos for unknown reasons. I've seen what my nephews have done to my brother's PC and I can tell you 400 dollars is a small price compared to the pains that brats wi
Re:Mod article -1: stupid (Score:4, Informative)
Re:Mod article -1: stupid (Score:2)
Actually it isn't, because most kids with their own PC use them as little more than a dedicated gaming machine. If you can't accept that I can't help you but it is the truth of the matter.
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
Re:Mod article -1: stupid (Score:2)
Buy your kids a Mac and stop whining.
Re:Mod article -1: stupid (Score:2)
It's different if your kid has every Gameboy version, a PSP and several consoles. But a single machine for a kid to game on isn't "every damn thing they want". I don't doubt that it can and does get out of hand but at the same time if your kid is playing Atari 2600 with no other alternative it's not too greedy to think that it might be time to upgrade.
Then again, if your kid is happy with the Atari so be it. There's nothi
Re:Mod article -1: stupid (Score:2)
In retrospect maybe. (Score:5, Interesting)
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.
Rehash of a Slate story (Score:4, Funny)
The Great Xbox Shortage of 2005 [slate.com]
Xbox Economics, Part 2 [slate.com]
Not enough statistical data to do that.... (Score:4, Interesting)
Still waiting for a cheap XBox... (Score:3, Interesting)
OK (Score:2)
Happy now?
Re:Still waiting for a cheap XBox... (Score:2)
It's not like there are any original XBox games worth playing that aren't also on PC. (except maaaaaybe Halo 2)
Re:XBox 1 prices are going up (Score:2)
that's a pitty (Score:2, Funny)
Of course they'd think it's too cheap (Score:2)
He could have a point. (Score:3, Insightful)
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.
price? how about unit distribution? (Score:3, Interesting)
That really hurt them at the beginning. I wonder if it affected the total number of possible sales?
No, the supply was too low (Score:4, Insightful)
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.
Comment removed (Score:3, Interesting)
they missed that boat already.... (Score:2)
Re:why no xbox redesign? (Score:2)
Re:why no xbox redesign? (Score:2)
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.
It's actually the reason why they rushed the 360. They were bleeding money from the first XBOX. Remember, they basically were buying parts from other people to build the Xboxes. They didn't "own the silicon" as people have been saying about it. They probably COULDN'T build a new version
Now I've heard everything. (Score:3, Interesting)
Re:Now I've heard everything. (Score:2)
Also why aren't they trying to do "more with less".
As many many many many many many people have said before. All the shiny graphics in the world won't make a horrible game bearable. Given that the average game costs $50-70 or so and is really only playable for a short amount of time before getting really boring
Look at the amount of people still playing NES games from the early 80s. I know NES gamers who play games made before their own birth for crying out loud.
You know
Re:Now I've heard everything. (Score:2)
But but but... that's crazy talk! Our games have boobies and 'splosions and shiny things! What more could you want?
Inflation? (Score:5, Informative)
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:Inflation? (Score:2)
Actually, your math is not realistic because you are including data from as far back as 1977. The economics of making computers has changed a lot since then. Look at the prices for the systems released from 1999 on:
SEGA Dreamcast launches in 1999 for $199.99 ____________ $228.09 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
As you
Re:Inflation? (Score:3, Interesting)
Redoing it quick, if you just take consoles from Nintendo, Sega, Sony and Microsoft, the average comes out to $324.27. The Xbox 360 core then, is still $25 adjusted dollars cheaper than average and the advanced bundle or whatever is not even 20% above average.
Re:Inflation? (Score:2)
Let's see how the most expensive systems fared in the market: 1) NeoGeo, 2) 3D0, 3) Atari VCS, 4) Sega Saturn. Wow! They all crashed and burned.
Now let's check out the cheapest: 1) GameCube, 2) Dreamcast, 3) Nintendo 64, 4) Super Nintendo. I'd call that a 75% success rate. Which list would you really rather be on?
Re:Inflation? (Score:2)
Re:Inflation? (Score:2)
I agree. (Score:3, Insightful)
It's priced about right. Check eBay (Score:2)
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.
Excuse Me... (Score:2)
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!!
The price of 360 was just fine... (Score:2)
It was INTENDED to sell this way (Score:4, Interesting)
The real world problem of equilibrium pricing (Score:3, Informative)
The original Xbox is still to expensive (Score:3, Interesting)
Teacher! Teacher! (Score:4, Funny)
Re:what an elitist (Score:2)
Re:Yes it was too cheap, thanks! (Score:2)