Wh1pL4shL1ve_007 on 08 January 2013
| Dodece said: Microsoft and Sony have historically both used loss lead models. The premise is fairly simple, and it shouldn't have to be explained every single time we have one of these threads. They take losses on hardware up front, because they can make it back plus much more later in a consoles life. Microsoft will offset a large initial loss via the profits they will generated off of, subscriptions, peripheral sales, proprietary software, and licenses. It may seem bizarre, but the real money isn't in the hardware itself. The hardware is just the up front investment, and the cost of doing business. Which will not even persist for the entire production run of the console. After two or three years the console will actually be sold at a real profit too. You don't even have to invoke contracts to make a console sold at a two hundred dollar loss up front feasible. Microsoft is just dabbling with the idea of contract services. A lot of companies are doing the same thing, because it opens up another path to potential customers. It doesn't mean they expect it to be their primary channel. All of this isn't hard to believe. It is to be expected. Microsoft is planning to sell a product that must remain relevant for over half a decade, and it cannot be radically redesigned in that space of time. That means for them it can't just be good for the here and now. It has to be great enough to be good seven or even eight years from now. That means it has to be close to top of the line. While I can see a argument for why Sony wouldn't opt into this model next generation. Given their current financial situation. Not being able to wait for a big pay day two years down the line. That argument really doesn't apply to the likes of Microsoft. Which doesn't have the same financial constraints, and has been incredibly successful with this model of doing business. Why would they fix something that wasn't broke, and more importantly something that is likely to get them even more customers the next time around. Can we be honest about something. Dismiss raw power as being the primary motivator all you want, but there is a solid core in gaming of people that only care about that. They may not be legion, but they make up their difference in numbers with their willingness to spend big. Losing two hundred dollars day one to wrap up that audience isn't any kind of fools bargain. When the company that wins the majority of them can expect to make six hundred dollars in profit off of them in the coarse of a console generation. It isn't stupid. It is real good business. The way I see it Microsoft is the only player that is both willing and able to splurge on getting them, and I know that I am probably going to get slammed for saying this. Don't be shocked when a number PS3 owners on this forum are willing to jump ship on day one if Microsoft is king hardware. For some gamers no mascot trumps the incredible bragging rights that come with having the best machine that money can buy. Anyway I don't know if the rumor is true, and frankly I don't really care what the final design will be. I have expected that the console will be incredibly strong, and I don't need rumors to convince me of that. They aren't a substitute for common sense. If there is a pattern of repetition. I fully expect it to continue. |
Hey, this is an off topic reply but how do you add friends on XBL without going on the console??
Yay!!!
