robjoh said:
The price is as eatrice pointed out not very cheap either comparing to a PS3. The only thing I can guess is that Microsoft gambles on the downloaded movies/music will be bigger than blu-ray
I would guess that they don't want to sell this system on the open market. It wouldn't make sense, unless you look at it from a different road. We all know that the Xbox will get an IPTV upgrade, and Microsoft tries very hard to get a lead position in this market.
What would you think if they don't want to sell this version to only a bunch of crazy hardcore fans. They need this version to offer them to IPTV providers, which bundle them with their program. They can offer the boxes rather cheap with all the bells and whistles that you need for IPTV receiver and on the same time, they get a gaming console for free. They might even include Xbox Live and they can take care of the hardware support.
Then this high price even has another reason: the IPTV provider can advertise how cheap their offer is compared to the market price. In fact Microsoft would have to limit the hardware sales of this version, so they can give the IPTV providers as many Xboxes as they like.
If you look at it this way they could be on a much better track. The Xbox might be the cheapest console in the market, because you down buy it, you rent it. Then this move would make sense, otherwise it would be ridiculous. And I don't think that they are in such a position that they would have to make such an offer.