I wrote up a long post in another forum regarding the potential inclusion of an HD-DVD player into the 360, and thought it could serve as interesting discussion on it's own. There was a similar thread back in October on this forum about rumours of an HD-DVD 360, but I think I've outlined a more detailed plan for the entire year. What do you make of 'my plan' for the 360?
I could see MS integrating an HD-DVD player into the Elite if several conditions are met. First, HD-DVD software sales pick up in Q1 next year because of the cheaper standalone players sold this holiday, cementing HD-DVD as here to stay. Second, cost of bare HD-DVD drives have by that point, been substantially lowered, where MS can negotiate to get the drive with a relatively small increase in cost compared to the DVD-ROM. I.e. they can negotiate it as only $20-30 more per unit, no idea if that's feasible (perhaps they can convince Toshiba to subsidize to get a similar boost for HD-DVD as PS3 was to Blu-ray). I believe this may be reasonable as Toshiba has stated earlier this year that they intend to equip all their laptops with HD-DVD drives next year (link), and the cost would have to be fairly low to not cause too big of a price increase for these notebooks.
Reasons why MS would integrate HD-DVD into the Elite are to counter potential PS3 price drops, and the much stronger and proven PS3 game lineup in 2008 compared to 2007.
How this would all work out as I see it:
Shortly after the holidays, MS announces that the bundling of two games for the Pro and Elite is to be discontinued. Existing stocks clear out as people don't want to miss the bundles.
Assuming GTA4 releases in 'early' 2008, MS plans the clearing out of the holiday bundles with the announcement of price drops. The price drop will occur for all models either a month before, or the month that GTA4 releases. I see the price drops as $30-40 ($239-249), $50 ($299), and $30 ($419) for the Arcade, Pro, and Elite respectively. The price difference between the Pro and Elite has increased to $120.
Die shrinks and cost reductions go as planned and Jasper has a 45nm Xenon CPU and 65nm Xenos GPU that rolls out around August 2008. With the (hopefully) big decrease in power consumption and heat, this turns out to be a rather significant design change. Some potential changes I see are: (1) built-in Wi-Fi, making it easier for customers to join the Xbox Live userbase and therefore increase potential revenue. Also, puts it on parity with Wii and PS3 which already have wireless. (2) redesigned cooling system, perhaps with a single larger fan that's quieter, (3) optical drive insulated/decoupled from the casing to decrease the noise, (4) slot-load optical drive, again, in keeping with the Wii and PS3, and (5) integrated power supply, if the physical size of the 360 remains about the same, making it more transportable.
With this redesign, the prices stay where they are, but the Elite's price difference is justified with the inclusion of the HD-DVD player. The larger hard drive and now HD-DVD player become very compelling reasons for someone to choose the Elite over the Premium. But for those who don't value HD video yet, or are still waiting for an end to the format war or cheap dual-format players, the Arcade and Pro are much more affordable option and better value with the extra features like wi-fi.
Now heading into Holiday 2008, it can go two ways. If the 360 is doing well against the PS3, and/or major PS3 games have been delayed until 2009, MS does the same thing it did this year; bundle a game or two but keep the price the same. If it's the opposite, have a second round of price drops in the beginning of November, similar to what PS3 did this year. So drop Arcade at or near $200 (mass market!), Pro to $250, and Elite below $400.
