Business Strategy and Retail Pricing for Xbox One X [2017] *spawn*

[mpg1]

Which is the price of a single Nintendo Pro Controller in Canada?

Shit forgot about that.

It's $490 CAD for Switch + Pro Controller. Xbox One X is $600 CAD. Difference then works out about $83USD..

Edit: don't get me wrong. I don't think it's entirely fair to compare Switch to other consoles because it's not a direct competitor. But in terms of the pure value proposition of your money I think Xbox One X would be better deal.

 

[powdercore]

I see you ate up their marketing already. I think the majority of gamers would be happy to get 1080P games at this point, the native res of most TVs. They are only projecting 50% market share for 4K by 2020. I think we will see the PS5 around then.

The good news is that 4K games will be automatically supersample to 1080p on a 1080p TV.

 

[powdercore]

The x1x comes a full year after the pro and the pro was being sold for a profit, for Sony, from day one. Less memory meant the same memory as the pro one year later. Downclocked components, so what they could achieve 6 tf , which isn't a great number for end of 2017, with more cu. As I wrote , in my first post after the price was revealed, is tha the extra 100$ is just to get a nicer looking box. Ms has some strange ideas, first they thought the gimmicky control method with Kinect would lead them to great success with the Xbox one and they failed. Now they seem to think that a sleek looking box is the key to success and I suspect they will fail again. If Sony can bring a console with the specs of the PS4 in 2013 ,with the actual box looking reasonably nice, then ms should be able to do the same with the x (that has a huge advantage only in gpu power) in 2017.

Consumer electronics don't always get cheaper with time. Just look at the iPhone and Galaxy S.

 

[Deleted member 13524]

"Why Xbox Boss Wants To Co-Exist With Sony"?
- Because a couple of years ago the closest alternative would be going out of business.
Intelligent leaders are careful about how bullish they can be, and Phil Spencer is certainly not stupid.
During this generation the Xbox just has a Sony platform that outsells it 2-1, "what they want" is to co-exist, naturally.

About this part:

My thoughts, from a business perspective this makes sense. In general, someone that is likely to pay for a Xbox Elite Controller or an XBO-X at 499 when there's an XBO-S available for half of that, those people are probably going to be people with the disposable income available and the desire to buy a lot of games and the DLC that is released for those games.

Then why isn't the XboneX being sold for $550-600 with a bundled Elite Controller?

 

[AzBat]

"Then why isn't the XboneX being sold for $550-600 with a bundled Elite Controller?

Probably because they already bought one?

Tommy McClain

 

[Deleted member 13524]

Probably because they already bought one?

What's wrong with having two?
If it's a premium console then it should be sold with Microsoft's premium gamepad.

 

[AzBat]

What's wrong with having two?
If it's a premium console then it should be sold with Microsoft's premium gamepad.

I don't disagree but if the box is already being sold for a loss @ $500, then I wouldn't expect another $150 worth of hardware added on top of that. I'm sure you would so you can laugh at them for releasing $600+ console bundle.

Tommy McClain

 

[Jay]

Then why isn't the XboneX being sold for $550-600 with a bundled Elite Controller?

because of added cost either to ms or customer.
it may be a premium console, but that doesn't mean you can charge what you want
they obviously feel $500 for base model is the premium console price that they can go for, otherwise they would've charged $550 and made a profit on each one.

 

[Deleted member 13524]

I don't disagree but if the box is already being for a loss @ $500,

No it's not. Here are the words where that idea came from:

"No," Xbox leader Phil Spencer told me in an interview this week, after I asked him if Microsoft makes any money selling the Xbox One X at $500.
"So, you're taking a loss?" I said. "I didn't answer it that way," he responded, intentionally not offering more detail.
(...)
Here's how Spencer put it:
"I don't want to get into all the numbers, but in aggregate you should think about the hardware part of the console business is not the money-making part of the business. The money-making part is in selling games."

Clickbait sites certainly enjoy making the "selling at a loss" headlines, but it doesn't make it true. Phil Spencer's wording in that article suggests they're selling it at close to production + distribution costs, but they're not taking a loss.

then I wouldn't expect another $150 worth of hardware added on top of that.

First, the XboneX definitely comes with a gamepad that is valued at ~$50 so it wouldn't be "$150 on top of that", it'd be $100.
Secondly, the difference in BoM + assembly between the elite gamepad and the peasant gamepad is definitely not $100. It's pobably not even close to $50.
Bundling the elite gamepad would have put a lot more weight into the "premium console" idea.

I'm sure you would so you can laugh at them for releasing $600+ console bundle.

What?

because of added cost either to ms or customer.
it may be a premium console, but that doesn't mean you can charge what you want
they obviously feel $500 for base model is the premium console price that they can go for, otherwise they would've charged $550 and made a profit on each one.

So what you're saying is they're selling it for as low as they possibly can. Isn't this the complete opposite of what a premium product means for a company?
Samsung's latest Galaxy S is their premium product, and it reportedly sells at a >250% profit. Microsoft's own Surface Pro sells for ~$3500 at its highest spec (Core i7 + 16GB RAM + 1TB SSD), and I bet they're making at least a 150% profit on that model. Xbox Team's own premium Elite controller is also making huge profits with a $150 price tag, probably some 200% too.
But the premium Xbox sells at close to 0% profit? Hum...



Here are my thoughts on the matter, then:

Despite Microsoft's words, the XboneX is not a premium product. Just like the PS4 Pro is not a premium product despite Sony's claims. The mid-gen upgrades exist in order to prevent the mass migration from console to PC that both console makers suffered in 2011/2012, while keeping the userbase happy by not breaking game compatibility.

The XboneX is specifically the product Microsoft had to release in order to take back a substantial performance crown in the hopes of enjoying a halo effect. It may be a "premium" product when it releases because of its starting price, but Microsoft will make sure to bring it down in price as soon as they can produce it for a cheaper price.

Come E3 2018, neither Sony or Microsoft will be showing a single game using the 2013 consoles, and I bet the Slim and the S may even be phased out in 2019-2020 as the stronger brothers come down in price.
But sure, as long as the mid-gen refreshes can't be made any cheaper, both Sony and Microsoft will call premium to the refreshes/upgrades.

 

[AzBat]

Man, you really got your knickers in a bunch.

Somebody is wrong on the Internet! LOL

Even after you went through all that work. There's no way MS is selling the 1X with an Elite controller @ $500. There's also no way they releasing a SKU @ >$500. They are hoping they buy the Elite controller(provided they don't have one already) where they make a profit. Would have been nice to have it in the package? Oh yes, makes it easier to stomach the $500 price. I've said as much before they launched.

Tommy McClain

 

[Deleted member 13524]

Man, you really got your knickers in a bunch.

Somebody is wrong on the Internet! LOL

What does this even mean?

 

[AzBat]

What does this even mean?

You didn't get the joke.

Tommy McClain

 

[dobwal]

WOW. The PS4 and XBX are not premium simply because they are meant to keep you away from PCs. So should Nvidia and AMD high end products be considered not premium because one of the purpose of the hardware is to keep current customers from switching to their competitors?

And whatever is considered premium is limited to features that can't or won't migrate to lower end devices over time?

So an XBOX or PS4 Pro with many times the performance of the base models at a higher price are not premium devices but I guess a base XB1 or PS4 whose case was sprinkled with gold flakes, had diamond encrusted buttons and leather pouches for the controllers with wood grain finishes would be considered premium.

MS and Sony aren't in the business of selling jewelry, they in the business of selling technology where premium products mostly deliver additional value through performance and not decorative embellishment. And in technology, most of today's premium products becomes tomorrow's low end fares.

 

[Silent_Buddha]

Then why isn't the XboneX being sold for $550-600 with a bundled Elite Controller?

Because at the end of the day it is still a console and there are limits to how much people will pay for a console.

A premium shoe can be a few hundred dollars. A premium smartphone can approach a thousand dollars. A premium all in one desktop can be 5k dollars. Every market has a soft ceiling after which increasing price results in a drastic reduction in the number of units that can be sold. For example, exotic premium items like smartphones that cost multiple thousands of dollars or shoes that cost multiple thousands of dollars sell just a very tiny fraction of a premium product in those categories.

Twice the price of the base console is a rather large increase while trying to maintain a reasonable value proposition. There's a difference between premium with an attractive value proposition and exotic premium that only the rich would consider.

2x seems a reasonable starting point if that's the segment you are targeting.

Regards,
SB

 

[Prophecy2k]

What I'm trying to get at (perhaps not very well) is that X1X is a deliberate attempt to hit a high point that mainstream consoles can't - and haven't tried to since the OG Xbox. Even PS4 Pro didn't try to go into the territories that X1X has. Not because Sony couldn't, but because Sony didn't have the desire - or perhaps the need - to make a "fuck it, it's just the best, at everything" console.

Consoles get faster and become more capable with time - as architectures improve and as transistor density increases. Because of trying to hit mass market price points, consoles like the PS3 and 360, came in at similar points. Even the PS4 that bested the X1 didn't have a completely one sided advantage - memory for games was the same meaning same assets, optical drive was basically the same, cpu was slower, BW was lower (though easier to take advantage of), audio processing was less capable.

With Scorpio it's just better than it's competition, at everything. But there is still a tradeoff. There's always a tradeoff.

And that's price.

Scorpio is designed for customers who see that as the optimal compromise. If someone is outraged at the price of Scoprio, then that person is not someone that Scorpio was designed for. There are already two - or perhaps three - other consoles on the market for those people.

The internets are in disbelief about a $499 console, but that's because lots of people just don't get what it is, because no-one tries to make console like that (any more).

The XB1 launched at a price of $499, and was worse than its competitor which was $100 cheaper.

Edit:
Whoa... I hit reply before realising there were 6 more pages of posts to catch up on

Edit2:
Frankly I was pretty disappointed in X1X's E3 showing. The console is expensive and I think MS entirely failed to show content to justify a purchase for me. Their announced slate of first party games are scraping the bottom of the barrel, with no titles that interest me at all and no notable 3rd party exclusives.

That leaves 3rd party multi-platform games to show what the XB1X can do, which remains to be seen, since PS4Pro has already shown us a decided level of apathy among developers when it comes to pushing the mid-gen console hardware beyond a resolution increase.

A resolution bump to 4k when I don't even have a 4k TV just isn't enough for me to justify a £450 console purchase. I was secretly hoping MS would stroll into E3 and reveal a full slate of top tier exclusive games that really stretch the XB1X's legs. I would have considered buying one had they delivered, but they failed pretty hard to bring the goods.