For both hardware and especially software, releasing an extra year earlier may ensure an extra year of profitable hardware and software sales.
Lets assume that the next generation of Xbox hardware is released in 2011, 3 years from now. The sales of both hardware and software aren't going to suddenly cease and desist unless the next Xbox takes the market by storm and catapaults to an ensured #1 position and even then its unlikely that more than 25% of the current userbase will step up to the next generation immediately.
By 2010/2011 the Xbox 360 is likely to be pulling at least $1.5 Billion a year in gross profit if you assume over 100 million software units sold per year @$7 each (console royalty) and the profit from Live, 1st party games, and hardware. This isn't going to cease and desist once the start of the next generation rolls around. New generations take time to ramp up and in this time the Xbox 360 will obviously continue to sell a reasonable number of consoles as the next generation ramps up. The target markets for a 6 year old console and a new console are completely different. This extra year could just about pay for the $1 Billion Xbox 360 RROD liability. Perhaps this is what the Xbox 360 executives meant when they said that they weren't so worried about the cost.
| Console | X360 |
|
Total
|
9,438,401
|
| Console | X360 |
|
Total
|
21,296,233
|
44% of the Xbox 360s sales were made in the last 12 months.
Current Software numbers: 151,068,009.
Software sold last 12 months: 95,231,611 or 63% of total.
Both the hardware and software numbers indicate a maturing platform. These numbers show that we are still in the middle of the hardware cycle for the Xbox 360 with potentially even bigger sales to come for both this time next year. Considering that there is a hardware refresh expected and the price cut from this year will carry through into next year with increased sales 2009/10 could be the peak year for the Xbox 360, the generation will be at full steam.
By 2009, the people who buy consoles will care even less about whats in the box in terms of relative capabilities than 2008 as both HD platforms will be completely obsolete anyway. "There abouts" is good enough for most people. The Xbox 360 will not decline based on any percieved or actual technical disparities with its competition and the Wii is a perfect testament to this. This is why the Arcade SKU exists in the first place. Its designed to be cheap to produce and cater to people who simply don't care about anything else.
So in the end, the extra year on the market will ensure extra profitability. The Arcade unit will be as cheap as chips and potentially broaden the market further by its ability to drop to astronomically low price levels if you consider the fixed costs of the HDD are absent and the DVD-Drive are low. The market will care even less about percieved technical disparities so reports about the Xbox 360 decline due to them have been grossly exagerated. Finally the Xbox 360 is still maturing as a platform and the biggest sales year(s) are still to come so hitting a target like 50 million consoles sold should be a piece of cake, and thats likely one of Microsofts goals anyway.
So yea, you got a problem with that? 
Fire away!
Tease.
