BKK2 on 11 November 2008
Original interview translated to English:
At the Games Convention in Leipzig, we asked the poeple from Sony if they expect a further price reduction for the Microsoft Xbox 360. They said "no" - it doesn't make any sense. What are the reasons for the price cut?
Robbie Bach: Well, this is something we had planned in the business model for quite some time. The way we think about pricing is a combination of two factors. One is: How fast can we reduce the cost of goods and the hardware and two: How fastcan we increase the demand at certain price points. We launched a year earlier than Sony. Our costs are lower. This gives us an advantage. We are now down on a price point where see that the mass adoption is starting to take place. In the last generation about 80 percent of sales happen below 199 dollars or 179 euros. We now have an entry level for Xbox Arcade at that price point. And we see the results in the market place: Our volume is up dramaticly, in Germany we passed PS3, our market share in most European countries almost doubled since the price cut. We had similar results in the US where we are outselling Sony almost 2:1 now. And with the economy struggling a little bit, people become more price sensitive.
Do you expect a price cut from Sony for the holiday season?
Robbie Bach: I know from the mathematics that it is hard for them because of there cost structure. If you look at the performance of Sony Corporation, it is a tough time for them to decide on that. But we'll see.
Do you earn money with a Xbox Arcade at that price point?
Robbie Bach: We don't really break that down. Sometimes we earn a little bit money with the hardware, sometimes we are loosing a little bit money with the hardware. Over time our business model is neutral. The place where you make the money are the games. Out game attach is highest in history at that stage of the life cycle. The business is profitable and we see that continuing.
New Xbox experience will start at November 19th. Which new features will be available?
Robbie Bach: Almost everything we have talked about will be available. The only thing which will come a little later will be Primetime, which will come in the spring. Experience is a tremendous opportunity to open up the environment of Xbox to more people. It is a big chance for the console.
Do you plan to integrate a blu-ray-player in the Xbox?
Robbie Bach: No, we have no plans with blu-ray. For a lot of different reasons: It's expensive. The customers don't want to pay more for the drive. And we don't actually get any benefits for the games. I can't tell my game publishers you can produce now on a blu ray disc. They can't - because that disc has to run on 22 million Xboxes that has shipped without a blu ray disc. And the final thing: We have a great way to deliver high definition content to the people - it is called Xbox Live.
Robbie Bach: Well, this is something we had planned in the business model for quite some time. The way we think about pricing is a combination of two factors. One is: How fast can we reduce the cost of goods and the hardware and two: How fastcan we increase the demand at certain price points. We launched a year earlier than Sony. Our costs are lower. This gives us an advantage. We are now down on a price point where see that the mass adoption is starting to take place. In the last generation about 80 percent of sales happen below 199 dollars or 179 euros. We now have an entry level for Xbox Arcade at that price point. And we see the results in the market place: Our volume is up dramaticly, in Germany we passed PS3, our market share in most European countries almost doubled since the price cut. We had similar results in the US where we are outselling Sony almost 2:1 now. And with the economy struggling a little bit, people become more price sensitive.
Do you expect a price cut from Sony for the holiday season?
Robbie Bach: I know from the mathematics that it is hard for them because of there cost structure. If you look at the performance of Sony Corporation, it is a tough time for them to decide on that. But we'll see.
Do you earn money with a Xbox Arcade at that price point?
Robbie Bach: We don't really break that down. Sometimes we earn a little bit money with the hardware, sometimes we are loosing a little bit money with the hardware. Over time our business model is neutral. The place where you make the money are the games. Out game attach is highest in history at that stage of the life cycle. The business is profitable and we see that continuing.
New Xbox experience will start at November 19th. Which new features will be available?
Robbie Bach: Almost everything we have talked about will be available. The only thing which will come a little later will be Primetime, which will come in the spring. Experience is a tremendous opportunity to open up the environment of Xbox to more people. It is a big chance for the console.
Do you plan to integrate a blu-ray-player in the Xbox?
Robbie Bach: No, we have no plans with blu-ray. For a lot of different reasons: It's expensive. The customers don't want to pay more for the drive. And we don't actually get any benefits for the games. I can't tell my game publishers you can produce now on a blu ray disc. They can't - because that disc has to run on 22 million Xboxes that has shipped without a blu ray disc. And the final thing: We have a great way to deliver high definition content to the people - it is called Xbox Live.
Link
He's pretty liberal with his numbers. For example he says 360 is outselling PS3 nearly 2:1 in US now, but in latest NPD figures it only outsold PS3 by 50%. In the full interview in German he says:
Microsoft has with the sales launch of the Xbox heavily on the online service Xbox Live set. Like many users, they have now and earn more money?
We have approximately 14 million registered users, roughly half of all Xbox buyers. The most important thing is: With Xbox Live we sell more games. A game over the Internet by several people played, all players have to buy. More Erlösstrome are the member contributions, so 59 euros a year, the fee for downloading movies or games and advertising.
We have approximately 14 million registered users, roughly half of all Xbox buyers. The most important thing is: With Xbox Live we sell more games. A game over the Internet by several people played, all players have to buy. More Erlösstrome are the member contributions, so 59 euros a year, the fee for downloading movies or games and advertising.
Again, saying 14m live users is roughly half of the installed base implies an installed base of 28m, but the 14m number of live users was previously given with the latest shipment numbers of 22.5m. It's actually more like two thirds of xbox owners are live members when you take into account the difference between shipped and sold.
So I wouldn't take his claim of xbox sales doubling in Europe too literally.
