A lot of people misunderstand the Xbox One's architecture. As if MS tried to match PS4, and ended up with a less powerful, more expensive system, due to their incompetence.
That is incorrect. Microsoft never tried to match PS4 power. They tried to build a low cost machine so they could pack Kinect in at a reasonable price.
Lets look at the two main drivers of console cost, the SOC and the RAM. The SOC's of Xbox One and PS4 are approximately the same size, and thus, the same cost. Xbox One SOC is 363mm^2. PS4's SOC is 348mm^2. Link http://www.xbitlabs.com/news/multimedia/display/20131126231812_Microsoft_Xbox_One_and_Sony_PlayStation_4_System_on_Chips_Compared_Under_Microscope.html
PS4's SOC packs in more ALU's though, obviously. The Xbox One's is slightly larger with less ALU why? Well the 32MB of ESRAM, obviously.
The purpose of the ESRAM is to enable the use of DDR3 memory, instead of GDDR5. DDR3 is much cheaper than GDDR5, but it has much less bandwidth as well. So in order for the design of a DDR3 console to not be bandwidth starved, you need a small cache of memory to put high bandwidth consumers in, and take a huge load off the main bus.
So the two main cost points of the designs:
Similar cost SOC's
Xbox One has much cheaper RAM than PS4.
Xbox is much cheaper to build than PS4.
Microsoft ruined that advantage by packing in extremely expensive Kinect 2.0 in every box, pushing the final price higher than PS4, when it in fact should be significantly lower than PS4.
They thought families and casuals would flock to Kinect like they did the Wii. They thought Kinect would cause the Xbox One to outsell the PS4 even at a higher price. Obviously. Microsoft suits were wrong.
A lot of Sony fans will try to make some twisted case that no, MS is just dumb (obviously) and DDR3 is not much cheaper than GDDR5. It's hard to argue this out because you cant buy GDDR5 at newegg and compare. Nobody really knows what GDDR5 costs, so they are free to claim it's as cheap as DDR3.
I have a chart, very rare, it's a couple years old now, that disproves this. Here is the link to a jpeg of it http://i.imgur.com/gSKHkDn.png It's a graphics card components cost chart. Look at the section labeled "RAM". You will see the video cards and how many megabytes they are to the left. All the video cards that have $3-4 in ram costs are DDR3. All the video cards that have $15+ RAM costs are GDDR5. Based on this chart, we can assume that wholesale GDDR5 costs an average of at least $18 per GB, while DDR3 costs at most $4 per GB.
For 8GB, PS4 RAM cost are 8GBX$18=$144
For 8GB, Xbox One RAM costs are 8GBX$4=$32
Xbox One's RAM is $112 less expensive than PS4's. Since the Xbox One SOC is the same size and price as PS4, we can conclude Xbox One without Kinect costs ~$100 less to build than PS4.
Are these estimates foolproof? Of course not. But I think the general idea is sound. So the conclusion:
Without Kinect, Microsoft could easily sell the Xbox One for $299
They might lose a small amount of money per unit at first, but they could no doubt afford it.
That's where we see the strength of the Xbox One design. Maybe not the most powerful, but a powerful enough console that is dirt cheap to build. Microsoft is currently just ruining all that in a silly attempt to push Kinect 2.0, which to be fair they probably didn't realize would flop.
At $299, I feel like Xbox One would be crushing PS4. Microsoft would not be able to keep Xbox on shelves. It would be selling out like PS4, only on a even higher level of magnitude, you wouldn't be able to find one anywhere. $299 is a disposable purchase in this day and age. Heck, a couple days ago MIcrosoft.com screwed up and there was a promo code that took Xbox One price on the website down to $399. While this glitch was short lived, people flocked to it. Proving to me that Xbox One would sell great at $399, let alone $299.
Will Microsoft follow my advice and release the $299 Kinectless Xbox One? I'm not convinced. A more likely strategy may be just to keep Kinect, bite the bullet and drop to $399 with Kinect. They may also release a Kinectless version for $399 and simply pocket more profit, as well. Nothing in MIcrosoft's history suggests they are particularly aggressive on price. Again, this doesn't take advantage of the strengths of Xbox One's design, though.
