| Dodece said: One word for the group to consider motivation. You cannot argue that profitability is the only goal for both companies. Were that the case there would no longer be a Sony console, and Microsoft would not have spent billions on their previous console. The reality is that both consoles are the fulcrum of a struggle. Which allows for both players to easily spend more then they make in the hope that through dominance they will reap a long term windfall. Microsoft wants more then to win the console war this generation. Given the current economic situation. Their strong financial status, and with the weakness of Sony they have an opportunity to push the competition from the market. A pricing war with Sony could drive the losses so high that Sony could be forced to leave the market. Giving Microsoft what it wants. I know a lot of members that say that will not happen, but we need to be realistic. How much can Sony afford to lose before the blow back from their investors causes damage. A ugly price war could drive the losses over ten billion dollars. Then any announcement of a new console could be the rallying call for a sell off. Loss of faith then leads to a decline in the companies credit rating. So for those saying Microsoft cannot possibly forfeit profit. I say to them were you Microsoft with the opportunity to permanently remove a rival would a little pocket change stand in your way, and have little doubt with the profit margins Microsoft enjoys it is pocket change. Especially with their attach rates and subscription service all they need is a little time to recover the losses. The question isn't whether Microsoft is greedy enough. The question is whether Microsoft is vicious enough. To be honest the way some members describe Microsoft I think you know the answer. Hell Sony is making it easy, because every time that Sony swallows a massive loss it just gives Microsoft cover. How can Sony claim unfair competition when they are the ones loss leading billions of dollars in cash. The answer is they cannot. Microsoft is just being financially competent. Hell thanks to a subscription service they can even proclaim that the proceeds are allowing them to cover the costs of loss leading. |
Microsoft actually has profit from the Xbox 360 to forfeit. Furthermore between a larger number of consoles on the market and their Live Gold subcriptions, they could afford quite a heavy price cut. They stated last year that they broke even on the Arcade with accessories and the difference between the Arcade and Premium is only about $40 if you consider thats the cheapest price for the HDD on Newegg and being an OEM they would likely get it cheap enough to offset the extra cost from the external HDD casing. Therefore they could offer that same unit for $200 easily enough by the end of the year as a 20% reduction in cost per year for the base machine is more than feasable.
The interesting part of all this is the creation of a Slim line 360 and what that would mean for price/features. They cannot add wireless now to the current design so in this respect they are hobbled and they wouldn't admit to wanting to add the feature or even that the feature is worthwhile. However what they can do is eventually integrate the ED-Ram, Xenon CPU and Xenos GPU into the one die which would cause a severe reduction in the price of every Xbox 360 component from power supply, to the number of layers on the PCB to the total cost of the chip packages, testing, and lithography. It would also allow them to implement wireless with a redesign of the console chassis.
What would a slim console mean? Well they could probably offer the Xbox 360 Premium for $150-180 if they really wanted to bust Sonys balls here and they would have every justification, owing simply from the very large reduction in cost from finally implementing their Valhalla chipset from information that was leaked years ago. Furthermore any losses they would take on the design would only likely be temporary as a larger single chip is a much better target for a process node shrink than three individual chips.
Tease.
