Business Approach Comparison Sony PS4 and Microsoft Xbox

[Shortbread]

Would be much better for Xbone early adopters if MS kept the price high so that the platform suffered. That way even though their investment had less long term value to them, meaning they'd wasted money, at least, like, there wouldn't be other people enjoying the system having paid 7% less ... *sigh*.

This reminds me of all the people bitching when MS released a HDMI enabled 360. "What about me?? What are you going to do for me!?". Nothing, because your system still does exactly what it is supposed to do, and exactly what it did when you bought it. Just laugh it off.

A $20-$30 HDMI cable function Vs. a $50 dollar price cut and free exclusive, isn't in the same ballpark. And wasn't that a year or so after anyhow...

Anyhow, MS should have "listened" in the first place that the current price was unattractive from the start. Thus, painting themselves in this spot.

 

[dobwal]

Every time a product comes out that's cheaper in the US than the UK/EU, there are a load of complainers, no? Every time US PSN+ gets a game the EU PS+ service doesn't, people complain, no (well they've stopped now because they've gotten used to it, but regional content differences still bug people)? What about the iPad 4 or whichever one it was that came out all of six months after the previous model? Did owners of the new, outdated model accept that quietly, or was there a lot of vocalisation from people who had no idea a new machine would be coming out so quickly and would have waited and bought the new design?

An expected price reduction, like a year or two after something's launched, or predictable events like Black Friday sales, are accounted by shoppers which is why they aren't annoyed. It shifts the choice more to them. An unexpected price drop is going to annoy those who get caught on the wrong side of it in most cases (you see that in product reviews on retailers, where someone states "great product, blah blah, only annoying that its had a £30 price drop since last week when I bought mine").

If two people go into a corner store and pick up the same Sunday newspaper and snack deal, and the first pays £5, and the next person is asked to pay only £1.50, you can be sure the guy who just paid £4 will ask, "Hey, I just had to pay £5. Why's he getting it cheaper?" And if the reply is, "There was a price drop came into effect at 3:00pm. You were a minute too early," I would bet money on him not saying, "Oh, okay. That's fair," and instead saying something like, "Don't be ridiculous! Give me the pound back. It's unfair that he should pay less than me for the sake of a few seconds."

And that represents small usually insignificant portion of the consumer base. People shop around for a reason and that is because they know price differences exist. About the biggest thing consumers are sensitive to, is price gouging or anything thats basically illegal, which is why most might questioned the regionally difference between PSN+ or Gold. Gold and PSN+ subs get price cuts all the time. Announce a significant price cut of PSN+ or Gold on here and you're more likely to see people post "thanks" and flock to take advantage of the price saving versus making posts that denounce the unfairness of such events.

And the stock market is basically a marketplace that engage the selling and buying of products who prices can change on a second by second basis. Are banks and brokerages inundated with stock buyers who want a refund every time the share price of one of their newly owned stock drops in share price? Nope, but the moment there is a hint that a company is illegally engaging in share price manipulation, law suits come out.

Price cutting happens all the time, we as consumers are conditioned to such reality especially when it comes to tech products.

 

[dobwal]

How can his opinion be false; based on rational data and common human emotions?

Do you complain every time you find out that someone was born into better circumstances then you were. Do you think most people readily engage in complaints about such things? Some will. Most won't. "Life isn't fair" isn't a statement that draws disagreement from the significant portion of the population. When humans set a condition of fairness, then we expect that condition to be met.

Do you really think if MS announced during the XB1 launch/Christmas season that the system will be $50 dollars cheaper and come with a major exclusive like Titanfall within 3 months... that MS would still be able to move 3 million some systems by 2013 years end?

Of course not... many of the early adopters would have waited until mid-March on doing so. Since MS is feeling giving, why-not offer the early adopters a free copy of Titanfall along with a $50 credit towards anything on Live?

And?

Maybe if MS reduced the XB1 price 8 months later, this would be a nonissue... but 3 months later after the launch, with a free exclusive, is a slap in the face, IMHO.

Thats your opinion. But portions of the tech market operates with bi annual to quarterly price cuts while releasing bigger and better products.

A console library is mostly dictated by the size of its userbase not how many bought a console at the same price as you. Given that we aren't your normal consumers when it comes to gaming, why should any avid gamer who makes any attempt to understand the gaming market consider a price cut, a slap in the face? A price cut of a console is an attempt to drive sales which is an attempt to increase the userbase. A bigger userbase has a better chance of increasing the value of your console purchase. The ASP of a console isn't the most relevant metric when it comes to encouraging development for a platform.

Plus when a price cut happens is irrelevant because 3 months or 8 months doesn't dictate the number of consumers who purchase a console right before the price cut.

 

[Shifty Geezer]

And that represents small usually insignificant portion of the consumer base.

I disagree there. I think most people to a degree will feel a negative response to missing out on a deal. Heck, today I ordered a Nexus 7. £199 from the Play Store. It's a good price I'd be happy to pay. Then I went looking for a sleeve for it on Amazon and found the same Nexus 7 for £172. "Poo," thinks me, suddenly miffed at my £199, which minutes earlier had been perfectly acceptable. Thankfully I could cancel the order with minimal effort and buy from Amazon. "Whoopee!" thinks me. These mild emotions came about due to a natural comparison of two prices.

At this point it's only differing opinions until one of us can present a well executed piece of research on human responses to price differences, or anything comparable. The (old) research I know of regards primates and their sense of fairness and equability, along with empirical evidence of people voicing discontent with missing out on deals, is enough to convince me, but clearly isn't enough to convince you. And that's not really a topic for the console forum anyhow!

 

[function]

A $20-$30 HDMI cable function Vs. a $50 dollar price cut and free exclusive, isn't in the same ballpark.

Yes, it's not in the same ballpark. Because you couldn't add HDMI out to your 360 without buying another for $300 (you didn't actually need to though, as VGA and component both fully supported 1080p). In this case, you're missing out on nothing though. You paid £30 more but got to use it for up to four months longer.

And people buying an Xbox one prior to Titanfall knew they wouldn't get Titanfall bundled with it, because they were buying it prior to Titanfall. They had the choice of Fifa and Forza bundles, if they wanted such a bundle.

And wasn't that a year or so after anyhow...

Not for the people who'd just bought one.

Anyhow, MS should have "listened" in the first place that the current price was unattractive from the start. Thus, painting themselves in this spot.

Attractive enough to sell more than 3 million, but not attractive enough to sustain healthy sales thereafter.

Sony could probably have launched at $500 and got another half a billion dollars in their coffers. I wonder how they look at their pricing decisions. They could have carried $500 / £400 for the first few months, I reckon, though they couldn't have known that back when they were deciding pricing strategy.

 

[Sonic]

Attractive enough to sell more than 3 million, but not attractive enough to sustain healthy sales thereafter.

Sony could probably have launched at $500 and got another half a billion dollars in their coffers. I wonder how they look at their pricing decisions. They could have carried $500 / £400 for the first few months, I reckon, though they couldn't have known that back when they were deciding pricing strategy.

I'm not so sure sales would look the same as they do if PS4 went with a $500 price tag. A large portion of its appeal is its lower price. If both systems had price parity at the beginning the sales numbers could have turned up drastically different. Sony was right to sell at $400 and have a comfortable lead in price compared to XB1. The sooner MS is able to achieve price parity with Sony the better.

 

[dobwal]

I disagree there. I think most people to a degree will feel a negative response to missing out on a deal. Heck, today I ordered a Nexus 7. £199 from the Play Store. It's a good price I'd be happy to pay. Then I went looking for a sleeve for it on Amazon and found the same Nexus 7 for £172. "Poo," thinks me, suddenly miffed at my £199, which minutes earlier had been perfectly acceptable. Thankfully I could cancel the order with minimal effort and buy from Amazon. "Whoopee!" thinks me. These mild emotions came about due to a natural comparison of two prices.

At this point it's only differing opinions until one of us can present a well executed piece of research on human responses to price differences, or anything comparable. The (old) research I know of regards primates and their sense of fairness and equability, along with empirical evidence of people voicing discontent with missing out on deals, is enough to convince me, but clearly isn't enough to convince you. And that's not really a topic for the console forum anyhow!

I not disagreeing that people may see a price cut as a missed opportunity. People don't jump for joy for missed opportunities. What I don't agree with is that a price cut naturally creates a negative impression on those that instituted the price cut.

Do early adopters, as Cjail mentioned, have some extra sense of entitlement? Why should a purchaser in February feel a greater level of discontent than a purchaser in September if both are met with a price cut 4 weeks after their purchase? Don't the hardcore make a greater portion of early adopters? Aren't they more readily aware of the dynamics of the console market? Shouldn't they understand that price cutting is an attempt to drive consoles sales which if successful can have a positive influence on the size of their library going forward? Are people's satisfaction of their console purchased based on the price paid by other purchasers?

Those are questions in which I would say "no". From my years of visiting here and other sites I generated a impression that most gamers want their console of choice to be successful and the metric mostly readily used to measure success is units sold not ASP. We all have a vested interested in seeing the userbase of our consoles increase. And price cutting has always been a tool for that purpose. If anything, early adopters would seem more understanding to a price cut close to their purchase.

I'll ask a question to the board. Out of those who purchased a XB1, who feels shorted by the TF bundle?

 

[betan]

Sony could probably have launched at $500 and got another half a billion dollars in their coffers. I wonder how they look at their pricing decisions. They could have carried $500 / £400 for the first few months, I reckon, though they couldn't have known that back when they were deciding pricing strategy.

Companies are not stupid. They know early adapters pay higher prices, but the cost of early price drops is obviously considered higher. Those price drops degrade perceived value, make your company look desperate and probably eat into your future products' sales as customers will wait for price drops.

 

[Dave Baumann]

I'll ask a question to the board. Out of those who purchased a XB1, who feels shorted by the TF bundle?

I don't understand these comments at all, this is part and parcel of any high tech consumer device. Shortly before getting my XB1 I outfitted the newly completed basement with a whole host of AV equipment, and guess what I saw in last month BB flyers - basically all my stuff knocked down by several hundreds of bucks each, no doubt readying for the 2014 versions. You can always wait for something better/cheaper but the flipside is you've lost the time you could have spent with it. If there is enough value in having something now as opposed to later then you have to decide that based on what it will do for you at the time and I would assume that anyone buying a launch version of the console would have done so because they want to play the games on it ASAP rather than later, that was the case for me (as my recent GS hikes attest to!).

 

[zed]

http://metro.co.uk/2014/02/24/xbox-one-price-cut-to-399-99-with-free-copy-of-titanfall-4316270/

GC: This price cut is very welcome but surely it’s an admission that the Xbox One is currently not selling as well as you’d hoped?

HE: No, I don’t think so. For us this is about giving UK gamers the best value that we can. We think that that starts with the announcement of this new price point, at 399. It continues with the inclusion of the hottest game of this new generation, in Titanfall, which is now included in the box at no additional cost.

see MS does care

I cant see the logic of MS's move, now a lot of ppl elsewhere eg the USA will be going, "OK I'll hold off my purchase of the xbone" MS are dropping the price
30 pounds & 42 pounds (titanfall price xbone amazon.uk) = $120 US
wanna save $100US just wait a few months, it'll likely drop this year, MS have already buckled

What about the iPad 4 or whichever one it was that came out all of six months after the previous model? Did owners of the new, outdated model accept that quietly

I didnt as I pointed out on this forum

 

[mosen]

http://metro.co.uk/2014/02/24/xbox-one-price-cut-to-399-99-with-free-copy-of-titanfall-4316270/

see MS does care

I cant see the logic of MS's move, now a lot of ppl elsewhere eg the USA will be going, "OK I'll hold off my purchase of the xbone" MS are dropping the price
30 pounds & 42 pounds (titanfall price xbone amazon.uk) = $120 US
wanna save $100US just wait a few months, it'll likely drop this year, MS have already buckled

I didnt as I pointed out on this forum

TF bundle (UK) £399.9 = $666.9.
TF bundle (US) $499.9 = £299.9.

 

[Rangers]

TF bundle (UK) £399.9 = $666.9.
TF bundle (US) $499.9 = £299.9.

Ouch...poor UK/EU. They are happy with "price cut" of Titanfall bundle to $667, we get it for $499 since launch...Damn, it's a wonder anybody can afford next gen over there. The XBO price is bad enough, add a much higher cost and in most cases lower average income in EU, it's a wonder it sells at all (same goes for PS4 to a lesser extent)

Google tells me PS4 retailed for 349 pounds in UK, which translates to ~$583 US dollars.

Original 430 pounds UK XO price=$717

 

[Deleted member 11852]

Ouch...poor UK/EU. They are happy with "price cut" of Titanfall bundle to $667, we get it for $499 since launch...Damn, it's a wonder anybody can afford next gen over there.

If you look at average wages, we in Europe get paid more than American workers. It's the nature of our economy.

 

[wco81]

That might be true of the UK, esp. in London, but not sure you could say that on the Continent.

 

[baten]

TF bundle (UK) £399.9 = $666.9.
TF bundle (US) $499.9 = £299.9.

This is partially courtesy of the magic of VAT, which in UK is 20%.

 

[Nesh]

If you look at average wages, we in Europe get paid more than American workers. It's the nature of our economy.

Europe is more expensive though. And also in the case of the UK they have a HUGE income tax

 

[London Geezer]

The separate universe that is London shouldn't take people away from the fact that in Italy for example, a 'normal' wage is about €1000 per month after tax. And where cost of living is quite high relative to people's income. And millions have no job or live on much, much less. As opposed to Germany where things are extremely different, and London which is just its own little world, and with lower taxation than many other European countries.
You can't group up the whole of Europe.

 

[Rangers]

That might be true of the UK, esp. in London, but not sure you could say that on the Continent.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

Only the oil exporters like Norway can top the US...and that's only due to oil (ironic).

If you look at average wages, we in Europe get paid more than American workers. It's the nature of our economy.

Seems like average income may/may not be higher, but net seems lower except a few places like Norway due to massive oil drilling and selling.

Based on continued oil and gas exports, coupled with a healthy economy and substantial accumulated wealth, Norway is expected to continue as among the richest countries in the world in the foreseeable future.

 

[Shifty Geezer]

I not disagreeing that people may see a price cut as a missed opportunity. People don't jump for joy for missed opportunities. What I don't agree with is that a price cut naturally creates a negative impression on those that instituted the price cut.

I wasn't saying anything about the impression of the of the price-cutting party, although some people will direct their annoyance. I'm talking from the perspective of people grumbling about missing out, rather than grumbling about someone and calling them evil/stupid/whatever. I've at no point been defending the view that 'MS are evil for doing this'. I've only been defending the right of those who feel that way to say as much, who'll be a tiny, tiny minority as the only people actually affected by the console.

I'll ask a question to the board. Out of those who purchased a XB1, who feels shorted by the TF bundle?

You'll be asking the wrong people, because the people who'll be put out are those who bought theirs very recently. A few months' use is probably worth £30 and you won't get anyone here complaining (unless they bought their console last week, maybe). So I'd say most XB1 owners aren't within the radius of effect of the announcement and won't be annoyed by it. Only those within that radius, who's sense of value equates the time they've had with the console as worth less than that £30 discount + TF game at a net worth of about £70, are going to be miffed at missing the opportunity of the deal.

 

[Shifty Geezer]

You can always wait for something better/cheaper but the flipside is you've lost the time you could have spent with it.

That's very true, but in the console space, an early price-cut is unexpected. If you were to look at XB1's price in December last year and think, "That's too steep, I'll wait," you'd be planning on getting it December 2014. Similarly, other shoppers would look and say to themselves, "I don't really want to spend that much, but if I want to wait for a price drop, I'll miss out on a year's use. So that year is probably worth the extra. I'll buy it now." It's those people who made a reasonable judgement who were caught by a little bad luck. It's not the same as shopping around for a better deal (eg. we have retail outlets dropping the price of XB1 by £30 just in store without any complaints) which comes down to one's skills as a consumer.

Going back to my Nexus 7 example, before buy one yesterday I looked up when the others were announced. June and July. So I'm figuring it'll be 5 or 6 months minimum before an update comes out. If Google announce a new N7 tomorrow releasing mid April, I'll be slightly pissed that I just missed out - I would have been unable to make an informed decision and my buying time would just be bad luck. If a new model comes out later in the year, I won't mind because I factored that into my purchase knowing at some point my machine will be superseded and valuing it for what it provides now.

I point again to the iPad outrage. Those buying iPads expecting them to be six months away from a better replacement were not at all pleased to see people buying a couple of weeks later getting a much better machine for their money.

It is part and parcel of the high-tech industry, absolutely. But people are still going to be annoyed by it, as that's part and parcel of the human condition.