News & Rumors: Xbox One (codename Durango)

[Shifty Geezer]

So how can the Durango be priced at 499 USD with that low specs?

Already covered. Price of goods != BOM + margin. You charge as much as you can for a product, balanced by number sales to maximise profits. If MS set an RRP of $500, it'll be because they feel their product is worth that much in relation to their business strategy. Their business strategy may not rely on selling as many units as quickly as possible. And setting high, you can always reduce the price to spur sales later on, but if you set too low at launch and demand exceeds supply, you miss out on profits with no opportunity to price higher.

 

[Xenio]

@ultragpu & (((interference)))

If I am not mistaken MS have modified the GPU so they might have improved performance...though Sony did the same for the PS4 GPU so the gap between the two could still be the same.

 

[GrimThorne]

There is just one thing that does not make sense to me:

- Paul Thurrot states that the price of Durango will be 499 USD

8GB DDR3 / 12 CU+8C Core APU seems very cheap to produce for the price of 499 USD, seems high.

499 USD is the pricetag expected for PS4 and that comes with a higher price BOM based on better APU and GDDR5.


So how can the Durango be priced at 499 USD with that low specs? Sure it will have Kinects tuff but that cannot be so expensive.

I thought that Microsoft would go lower specs to be able to undercut PS4 in price, which worked great for them with the 360.

No one knows yet, so it's just speculation as to just how much console you'll be paying for vs how much the console will be worth. The $500 might even represent MS taking an early loss as they did with the 360 and Xbox1, meaning the console may cost them more to manufacture.

And we also don't have clear information on the alleged contract subscriptions either but it's not hard to imagine something matching the business models of smart phones. Down payment and then paying the rest off with a 2 year subscription etc. With the hope that after the two years is up you could go back to your annual fee and not be locked in at the monthly fee rate. Maybe MS would even allow you to pay it off faster.

But like I said, nobody knows so it's all up in the air right now.

 

[Bagel seed]

We're going around in circles faster and faster, like at the end of a toilet flush.

I'm sure durango will be great, consoles aren't all about big numbers. If nothing else, nintendo has proven that often enough over the years.

Proving it by failing with the powerful GC or succeeding with weak Wii? :smile:

 

[expletive]

The event is going to be an hour long at 10am PST and broadcast on Spike TV. This thing is going to be a jam packed entertainment fest with a celeb appearance or two. It's a partnership event between Spike and MS with none other than Doritos Pope Keighley as the host. It being on Spike probably means a certain level of production needs to be met like with the VGA's. We're definitely not going to have a Cerny-esque monologue from their tech lead about the system architecture. It's going to be limited to subjective words and phrases like 'powerful', 'advanced' and 'cutting edge'. If a GHZ or MHZ figure of any kind is actually mentioned I'd be very surprised.

Is this a press release, or someone 'in the know''s statement, or your estimation?

 

[PalmiNio]

Already covered. Price of goods != BOM + margin. You charge as much as you can for a product, balanced by number sales to maximise profits. If MS set an RRP of $500, it'll be because they feel their product is worth that much in relation to their business strategy. Their business strategy may not rely on selling as many units as quickly as possible. And setting high, you can always reduce the price to spur sales later on, but if you set too low at launch and demand exceeds supply, you miss out on profits with no opportunity to price higher.

Would make sense if the was no PS4 on the market.

But if indeed the gap between PS4 and Durango is 30% in terms of specs then 499 USD would be a hard sell if PS4 lands on the same price.

MS did 299/399 this generation and that proved to be a smart move to get started quick. So to add 100 USD this gen feels strange.

If the specs are so low I would expect 50-100 USD differense in recommended streeprice between PS4 and Durango.

If it wasn't for 360 then Sony wouldn't have lost so much money.

 

[fehu]

- we need a bigger gpu!
- whaaaaaat? we have no time to redesign th soc!
- do you have any other design?
- weeeell... there's that server uber soc... you must see it! it's the biggest thing that we have made in years! but it can't work in a console... it's hot and expensive... and has a lot of bus and technology usable only on a server... it will double the costs and maybe overheat... it's not...
- Shut up and take my money!

 

[Bagel seed]

Is this a press release, or someone 'in the know''s statement, or your estimation?

Just my estimation. But it is a Spike/MS partnership with Keighley as a host according to the PR.

 

[Pozer]

- we need a bigger gpu!
- whaaaaaat? we have no time to redesign th soc!
- do you have any other design?
- weeeell... there's that server uber soc... you must see it! it's the biggest thing that we have made in years! but it can't work in a console... it's hot and expensive... and has a lot of bus and technology usable only on a server... it will double the costs and maybe overheat... it's not...
- Shut up and take my money!

I just don't see a game console with ECC ram, it makes no sense unless you care nothing about BOM. Then again I would have said 8GB of GDDR5 was near impossible too. even Then again, Sony has promised features in PS3 reveal (6 USB, dual HDMI, 3 NICs) and removed them for cost. I'm sure there are more surprises coming before this gen launches.

 

[Shifty Geezer]

If the specs are so low I would expect 50-100 USD differense in recommended streeprice between PS4 and Durango.

You don't set price by BOM. There a insanely expensive watches out there which people prefer to buy over better quality, better made watches, because the watch company has marketed themselves effectively. We have no idea how MS is marketing the product, positioning it, what services and features it comes with, or even what hardware it'll actually launch with (only what it was designed to have as of this year). There is nowhere near enough information to start speculating of the business side of competing with Sony, Apple, Samsung, and how profitable the SB platform will be, or how much it helps MS grow in other areas, etc., etc. "MS's console is less than Sony's, so should cost less," is a very naive view of how business works. Indeed, successful business is all about controlling the market without falling back on price as the differentiator, and many businesses manage that successfully, while others don't and can price themselves out of the market as a result.

 

[expletive]

You don't set price by BOM. There a insanely expensive watches out there which people prefer to buy over better quality, better made watches, because the watch company has marketed themselves effectively. We have no idea how MS is marketing the product, positioning it, what services and features it comes with, or even what hardware it'll actually launch with (only what it was designed to have as of this year). There is nowhere near enough information to start speculating of the business side of competing with Sony, Apple, Samsung, and how profitable the SB platform will be, or how much it helps MS grow in other areas, etc., etc. "MS's console is less than Sony's, so should cost less," is a very naive view of how business works. Indeed, successful business is all about controlling the market without falling back on price as the differentiator, and many businesses manage that successfully, while others don't and can price themselves out of the market as a result.

I think there's an even more direct argument to be made on MSRP than the 'perceived value' one you're making above and it's that software costs money.

The OS, the system apps, the hooks that bring all the services together, don't just magically appear once you build an SOC. People may not like the idea that the software side can be even more costly than adding CUs or GDDR5 but its the truth and has to be accounted for, even moreso when building a console.

If the rumored specs are accurate, it does not mean the MS is making more money per console, it (could) simply mean that they are investing resources in software and functionality instead of vertical resolution. The question then becomes, as an entire package, does it have enough value to justify its price in absolute terms, and against the competition.

 

[Brimstone]

There is just one thing that does not make sense to me:

- Paul Thurrot states that the price of Durango will be 499 USD

8GB DDR3 / 12 CU+8C Core APU seems very cheap to produce for the price of 499 USD, seems high.

499 USD is the pricetag expected for PS4 and that comes with a higher price BOM based on better APU and GDDR5.


So how can the Durango be priced at 499 USD with that low specs? Sure it will have Kinects tuff but that cannot be so expensive.

I thought that Microsoft would go lower specs to be able to undercut PS4 in price, which worked great for them with the 360.

$499 and low specs doesn't make sense. Also some guy from AMD said Avatar like graphics when speaking to xbox magazine.

 

[PalmiNio]

You don't set price by BOM. There a insanely expensive watches out there which people prefer to buy over better quality, better made watches, because the watch company has marketed themselves effectively. We have no idea how MS is marketing the product, positioning it, what services and features it comes with, or even what hardware it'll actually launch with (only what it was designed to have as of this year). There is nowhere near enough information to start speculating of the business side of competing with Sony, Apple, Samsung, and how profitable the SB platform will be, or how much it helps MS grow in other areas, etc., etc. "MS's console is less than Sony's, so should cost less," is a very naive view of how business works. Indeed, successful business is all about controlling the market without falling back on price as the differentiator, and many businesses manage that successfully, while others don't and can price themselves out of the market as a result.

I understand the logics behind product marketing, please don't lecture me on that

My questions is based on the info from leaks: 499 pricepoint and the hardware from VGLeaks.

Based on the assuption that the plattform will be a console with the same APU as PS4 but weaker under the brand of Xbox - this indicates that the main market will be gaming and thus PS4 as the main competitior.

Even if the add some Apple TV / Google TV / STB functions - it is still a high pricepoint.

Comparing consoles with watches is just plain stupid. The branding value on watches cannot be compared with a console. Even if you put trillions of USD in marketing it won't matter if you lack games on the console.

Thus for Microsoft to succed it needs advantages over Sony as Sony seems to have the uper hand on Hardware (based on leaks) and First-party software (based on history).

I find it hard to believe that the rumoured TV function will have any large value at 499 USD to the 140 million users that wants to upgrade from PS3/360.

It might apeal to some new customers but at the same pricepoint with lower specs compared to PS4 the Durango will have some problems with the current gamer market.

The biggest avdantage for 360 was indeed the price. They where "less bullshit - better value" choice of the last generation. Sony was the one trying to claim that the pricegap was valid due to extra features.

 

[Betanumerical]

$499 and low specs doesn't make sense. Also some guy from AMD said Avatar like graphics when speaking to xbox magazine.

They say something similar about all the consoles every generation it would be unwise to take it literally.

 

[fehu]

I just don't see a game console with ECC ram, it makes no sense unless you care nothing about BOM. Then again I would have said 8GB of GDDR5 was near impossible too. even Then again, Sony has promised features in PS3 reveal (6 USB, dual HDMI, 3 NICs) and removed them for cost. I'm sure there are more surprises coming before this gen launches.

just joking

 

[upnorthsox]

They say something similar about all the consoles every generation it would be unwise to take it literally.

You mean, Toy Story like graphics.....

 

[Scott_Arm]

I understand the logics behind product marketing, please don't lecture me on that

My questions is based on the info from leaks: 499 pricepoint and the hardware from VGLeaks.

Based on the assuption that the plattform will be a console with the same APU as PS4 but weaker under the brand of Xbox - this indicates that the main market will be gaming and thus PS4 as the main competitior.

Even if the add some Apple TV / Google TV / STB functions - it is still a high pricepoint.

Comparing consoles with watches is just plain stupid. The branding value on watches cannot be compared with a console. Even if you put trillions of USD in marketing it won't matter if you lack games on the console.

Thus for Microsoft to succed it needs advantages over Sony as Sony seems to have the uper hand on Hardware (based on leaks) and First-party software (based on history).

I find it hard to believe that the rumoured TV function will have any large value at 499 USD to the 140 million users that wants to upgrade from PS3/360.

It might apeal to some new customers but at the same pricepoint with lower specs compared to PS4 the Durango will have some problems with the current gamer market.

The biggest avdantage for 360 was indeed the price. They where "less bullshit - better value" choice of the last generation. Sony was the one trying to claim that the pricegap was valid due to extra features.

People put way too much emphasis on hardware specs when they're discussing pricing. People will pay perceived on value, not specifications. Maybe $500 would be too high. Maybe not. Until the thing is announced and we see what kind of reaction it gets from people at large (not just the hardcore on the forums), then I don't think it's worth speculating. The people you see on forums are an incredibly small fraction (not even 1%) of the 150+ million people that bought ps360 last gen. I'm not convinced any of the pricing rumours are true anyway.

 

[Cyan]

There is just one thing that does not make sense to me:

- Paul Thurrot states that the price of Durango will be 499 USD

8GB DDR3 / 12 CU+8C Core APU seems very cheap to produce for the price of 499 USD, seems high.

499 USD is the pricetag expected for PS4 and that comes with a higher price BOM based on better APU and GDDR5.


So how can the Durango be priced at 499 USD with that low specs? Sure it will have Kinects tuff but that cannot be so expensive.

I thought that Microsoft would go lower specs to be able to undercut PS4 in price, which worked great for them with the 360.

It is really expensive for what it offers, a darn rip off. Don't do this to me Microsoft.

Here in Europe 500USD converts into about 320+£ - 400€, but it'll sell for 500£-500€. Not so nice.

It costs too much that the specifications have to be off. Either that or certainly the price is off.

 

[french toast]

I dont know about the US market so much, but it would be suicide to price the console at even £400 in the uk, let alone anything more.

IF it sells as a stand alone unit, the base unit will be no more than £350.

 

[Cjail]

I haven't seen a sane rumour that suggests this, could you please provide a link (unless by modifications you mean the eSRAM which we all know about)

Sorry "modify" isn't the right word, I should have said "customize".