Economist Says Xbox One is Too Expensive

[StewShearerOld]

Economist Says Xbox One is Too Expensive

Economist Rafi Mohammed wants to see the Kinect made optional to help lower the Xbox One's price

Among Sony's victories at E3 (and Microsoft's arguable mistakes) was the fact that Xbox One, <a href=http://www.escapistmagazine.com/news/view/124770-Xbox-One-Debuts-This-November-UPDATE>priced at $499, was substantially more expensive than the PlayStation 4 which would sell <a href=http://www.escapistmagazine.com/news/view/124812-Update-PlayStation-4s-Appearance-Finally-Unveiled>for $399. Microsoft has since <a href=http://www.escapistmagazine.com/news/view/125111-Microsoft-499-Xbox-One-Will-Over-Deliver-on-Value>defended this price point, pointing to the inclusion of devices like the Kinect and the various services the new console will offer as being well worth the extra one hundred dollars. While Microsoft's reversal of the Xbox One's <a href=http://www.escapistmagazine.com/news/view/125204-Microsoft-Drops-Xbox-One-DRM-Restrictions-UPDATED>unpopular DRM has like made the console more tantalizing to consumers, there are still people who think that its price point may prove to be a blunder.

"I still think the price is too high," said Rafi Mohammed, an economist and author of The Art of Pricing. "You want to get that console in consumers' hands, and then where you really make the money is off of the games." Mohhamed doesn't see this happening at the console's current $499 price point, at least not to the extent Microsoft may be hoping and with a competitor selling for less. "What they really should be doing to get consoles in consumer's hands is to decrease that price and make the Kinect an accessory."

With Microsoft currently pushing the Xbox One and Kinect as essential partners, the idea selling the Kinect as optional is likely something that won't appeal to the company. That said, there are probably more than a few gamers who could do without the Kinect and, as Microsoft has already confirmed <a href=http://www.escapistmagazine.com/news/view/124447-Xbox-Ones-Kinect-Can-Actually-Be-Turned-Off>it can be turned off, it begs the question of whether or not it needs to be there in the first place. A cheaper, Kinect-less console in homes would probably be better for Microsoft than an expensive console gathering dust on store shelves. If the company doesn't believe us, it can always <a href=http://www.escapistmagazine.com/news/view/88145-PS3-Is-Dying-On-The-Shelves>ask Sony.

Source: <a href=www.bloomberg.com/video/did-microsoft-overshoot-on-xbox-one-pricing-4~~kjSH9TReVJAd9tivMpA.html>Bloomberg


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[RedEyesBlackGamer]

They are going to. Whether before release or after the first month of sales are subpar. They would be idiots to go down with the S.S. Kinect. They will abandon ship at some point, hopefully sooner rather than later.

 

[JasonBurnout16]

It's a good point that the company should be aiming to make money off of games being sold, and not of the console. For every console I've ever brought I've brought 1 or 2 games to go alongside it straight away alongside the console, such as when I brought my 3DS XL. I imagine anyone who buys the PS4 at launch will want at least one game to go alongside it, which will boost the price. The same goes for the Xbone though, and that price then starts to become even more unmanageable.

I'd also say that the Kinect needs to be scrapped. Coming from a student, I don't have room for such a device - its pretty much pointless to buy one. If people want it, let them buy it separately.

 

[Ruley]

What he suggests is the strategy they used with the 360. just make it cheap and get it into peoples hands.

I said it before and i'll say it again, microsoft feel they can now cash in on all those 'loyal customers' that bought the 360 by selling the Xbone for whatever they want and these so called loyal fans will pick it up regardless.

It doesn't work like that Microsoft, make it cheaper and maybe then you'll see a profit on this thing.

 

[faefrost]

He's missing the point. The Kinect is not there for gamers or console owners. It is there to collect usable marketable meta data on users, user habits and most importantly user TV and commercial viewing. Think about it. The thing can detect your heartbeat and your enthusiasm for something based on subtle changes to your infrared skin tones. There is not now nor will there ever be a true legitimate gaming need for such technology... but advertisers and marketing people will pay top doller for that kind of information. They say the Kinect can be turned off. That's not entirely true. It can be turned off when you are not using the console. MS doesn't care about that time. It comes on when you use said console, especially when you use it to watch TV. (TV! TV! TV! TV!)

 

[oldtaku]

He may be right about the cost, but they're going to stick with the Kinect. It's the one differentiating feature of the system, other than Halo 5.

 

[RhombusHatesYou]

"I still think the price is too high," said Rafi Mohammed, an economist and author of The Art of Pricing. "You want to get that console in consumers' hands, and then where you really make the money is off of the games."

Ugh. Can Microsoft, or more specifically the division responsible for the Ecksborks, afford another generation using the Loss Leader model? Personally, I'd say if Microsoft are going to heavily subsidise the Xbone they'd be better off going the route of mobile phones by offering cheap consoles to consumers willing to sign up for an extended XBL Gold contract.

I feel dirty typing that.

 

[AzrealMaximillion]

They'll make an Xbox One Slim a couple years down the road if the sales are that bad. Either that, or due to the TV features being intertwined with Kinect, we'll see MS stick with this asinine idea.

 

[omega 616]

I think the cost of fanboyism will be $100, they can have the PS4 for $100 less but they would rather have their fav for that $100 more.

That is the way I see it at the moment.

To be honest, I was the same with the PS3 ... no matter what, I was getting a PS3. Kind of the same with the PS4, I say kind of 'cos if Sony did what MS tried to do with DRM, I don't know if I would have gotten it.

 

[nevarran]

Awesome to see so many people concerned about these 100$. Man, how did we end up in the financial crisis, with so many financial experts out there? We should've been swimming in money...

 

[RandV80]

He's missing the point. The Kinect is not there for gamers or console owners. It is there to collect usable marketable meta data on users, user habits and most importantly user TV and commercial viewing. Think about it. The thing can detect your heartbeat and your enthusiasm for something based on subtle changes to your infrared skin tones. There is not now nor will there ever be a true legitimate gaming need for such technology... but advertisers and marketing people will pay top doller for that kind of information. They say the Kinect can be turned off. That's not entirely true. It can be turned off when you are not using the console. MS doesn't care about that time. It comes on when you use said console, especially when you use it to watch TV. (TV! TV! TV! TV!)

Or they give you the option to turn it off as demanded and stick with it, then rely on making it a chore to turn off and general consumer apathy that most people will leave it on anyways and collect their marketing data that way.

Why I'm skeptical that they'd tried to sneak data mining in under the radar is because if they tried that they'd get busted within a week by security experts and certain enthusiasts. Any data collection will need to be stored on your hard drive and transferred via your internet connection, so these guys will be able to analyze whats being saved and what's going out pretty easily.

 

[Doclector]

Oh really? Thank god we have you, Rafi. If you weren't around, we'd never figure out anything, we'd starve to death in our beds after forgetting how to get out of them.

 

[RandV80]

"I still think the price is too high," said Rafi Mohammed, an economist and author of The Art of Pricing. "You want to get that console in consumers' hands, and then where you really make the money is off of the games."

Ugh. Can Microsoft, or more specifically the division responsible for the Ecksborks, afford another generation using the Loss Leader model? Personally, I'd say if Microsoft are going to heavily subsidise the Xbone they'd be better off going the route of mobile phones by offering cheap consoles to consumers willing to sign up for an extended XBL Gold contract.

I feel dirty typing that.

I've heard people mention this subscription idea but I don't think they can pull it off in any meaningful way. Xbox Live Gold is $60 a year, a cell phone contract can be that much a month. Let's you sign a cell contract for two years at $50 a month, that's a minimum of $1200 your agreeing to pay them. With their profit margins it's pretty easy to toss in a cell phone for free that likely only has a wholesale value of $50-$200. Two years of Xbox Live on the other hand is $120 total, so unless they want to admit that they have a ridiculously high profit margin on it they could maybe squeeze out $50 at best of the total price. A $450 Xbox One with a two year contract still doesn't look as appealing as a $400 PS4 for anyone who's being price conscious.

 

[Ryan Hughes]

Making the camera optional is one thing they can do to lower the price, but that will only drop the cost of the console by about $60. The major issue that needs to be addressed by Microsoft is the fact that the CPU and GPU are not cast in the same die. This is what allowed Sony to sell for their $399 price. Right now, the current architecture has the CPU and GPU on the same motherboard, but not in the same die. This makes the unit much cheaper to manufacture, consume less power and generate less heat when used. But from an engineering standpoint, it can be very difficult to accomplish.

A full redesign of the Xbox One system needs to take place in order to see the price drop to four hundred dollars or so.

 

[Toadfish1]

I imagine anyone who buys the PS4 at launch will want at least one game to go alongside it, which will boost the price.

Putting aside all the4 free-to-play games you can get from day one with the system, what about the free game you guy with Ps+?

Microsoft has since <a href=http://www.escapistmagazine.com/news/view/125111-Microsoft-499-Xbox-One-Will-Over-Deliver-on-Value>defended this price point, pointing to the inclusion of devices like the Kinect and the various services the new console will offer as being well worth the extra one hundred dollars.

Can anyone name one? Apart from the Kinect, what services does the One offer that the Ps4 doesn't?

 

[Nowhere Man]

He's missing the point. The Kinect is not there for gamers or console owners. It is there to collect usable marketable meta data on users, user habits and most importantly user TV and commercial viewing. Think about it. The thing can detect your heartbeat and your enthusiasm for something based on subtle changes to your infrared skin tones. There is not now nor will there ever be a true legitimate gaming need for such technology... but advertisers and marketing people will pay top doller for that kind of information. They say the Kinect can be turned off. That's not entirely true. It can be turned off when you are not using the console. MS doesn't care about that time. It comes on when you use said console, especially when you use it to watch TV. (TV! TV! TV! TV!)

Exactly. This is why I honestly doubt that they will ever sell a version of Xbone without the Kinect. I think somehow Microsoft may be willing to take somewhat of a hit in sales if it means they are making money off of the meta data they will be collecting off the people that buy this thing. Getting rid of the drm nonsense is one thing, but in my eyes they have a long way to go if they wanted me to be even remotely interested in their product. Namely making Kinect optional thus also lowering the price.

Kinect is just a slimy way of collecting data off of you and an incredible waste of money to those who don't want it.

 

[RJ 17]

The truly hilarious thing about this is that the Kinect has already proven itself to be a complete failure as a console accessory. Nobody wanted the damn thing on their 360 and the poor sales proved that......soooooooooo why do they suddenly think people will be thrilled to use it if they simply force us to? Nobody asked for the Kinect, very few people (in relative terms) bought a Kinect. By making it even more creepy, forcing it to be hooked up to the console, and thereby making it necessary to make your console $100 more expensive than the competitor, all you're doing is shooting yourself in the foot three times.

I mean as originally designed, the XBone was just an enormous blunder from top to bottom. There was literally NOTHING appealing about it, no reason to buy it at all. By rolling back on DRM and such, they've made it more appealing. But people still aren't going to want to be forced to pay an extra $100 because the console comes with an accessory they have absolutely no interest in using at all.

 

[The Lugz]

ah, console wars

I already won them, the only winning move is not to play.
https://www.youtube.com/watch?v=NHWjlCaIrQo

see? the computer is smarter than you.

learn!