Borkachev on 26 January 2008
That trick only works when the end product is somewhat stable, Borkachev. The failure rate of the 360 models out now is significantly higher than the original PS2 models. And more importantly, Sony resolved the larger part of the issues by the end of the second year of the console's life, just before the first price drop.
I would argue that it did work for Microsoft, and that the absurd failure rate of the 360 is only further proof of how little consumers care about product quality. Microsoft turned the 360's fortunes around spectacularly compared to the first Xbox, and I doubt they could have done it if they'd kept the machine under development for another 6 months to fix the issue, or raised the price to improve the build quality.
I've also heard a lot of people say that the design flaw was fixed within two years of launch, right around when they introduced the improved warranty program. Take that for what it's worth -- MS was getting a lot of bad publicity over it, but I'm honestly not sure it was hurting their income much.
Another smart move by Microsoft (and I guess a bad move by Sony by contrast) was to split up and spread out the cost of their console's functionality. Charge $50 a year for Xbox Live, $200 for the HD movie player, $100 for the harddrive... it all adds up fast, but all customers care about is the price on the shelf. People love installment plans, and even if it's kind of annoying in the long run, it makes good business sense.
