Really? Do you have the data?
Dispatches From the Console Wars
- Thread starter pipo
- Start date
It's as likely for MS to sell 15M X360 by June 07 as for Sony to ship 4M PS3's by March 07.
This argument is absolutely stupid, there is no reason for the 360 to move down in price unless Sony do. The 360 at the moment is 'in the middle' with Sony targetting the high end and the Wii targetting the low end - it's selling well, and the argument that PS3 is too expensive/Wii is not next-gen works. It doesn't make any business sense to sell thing for cheaper if it is selling well, it makes sense to stick at the price, and cut manufacturing costs for a greater return (MS have said they prefer to profit on hardware this iteration, slashing prices doesn't realise this).
To add to this, I think Sony will aggresively use their existing PS2/PS1 libraries here and sell the budget games over PSN for a heavily discounted price (be nice to see Sega get involved and sell their old games here too). I agree that you'll see the emergence of a 360 budget back-catalogue, but I think, because of the high attach rates already, it won't be a great success (i.e. it'll end up in bundle packages or fewer sold - new buyers will want the good titles not the launch titles).
I wouldn't say the hardware is better in either, developer experience should favour the 360 though.
As I mentioned previously, I doubt you'll see such a radical price cut because it doesn't make much sense, the only way I would see it happening is an increase in the XBL pricing or the price of games, because the books have to be balanced.
Europe is intriguing, if Sony is forced to delay further they might lose market share but this is already extremely high (just look at the UK). At the moment, with little shipping data and delivery forecasts, it is reasonable to suggest that there would be a delay, but personally I wouldn't make a prediction until there is more information.
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Well certainly it's a mysteryBut if you browse the site's HTML source,
Apparently this guy who's running that site had to stop it to update every 7 seconds because of the AJAX load. But if you reload thisCode://window.setInterval("read_cont()", 7000); //window.setInterval("read_cont2()", 20000); ... function read_cont() { zeit = new Date(); ms = (zeit.getHours() * 24 * 60 * 1000) + (zeit.getMinutes() * 60 * 1000) + (zeit.getSeconds() * 1000) + zeit.getMilliseconds(); read_it = 1; makeRequest("update_data2.php?x=" + ms); } function read_cont2() { zeit = new Date(); ms = (zeit.getHours() * 24 * 60 * 1000) + (zeit.getMinutes() * 60 * 1000) + (zeit.getSeconds() * 1000) + zeit.getMilliseconds(); read_it = 2; makeRequest("update_data2.php?page=results&x=" + ms); }
http://www.nexgenwars.com/update_data2.php
it's updated before your eyes! Do you honestly believe it can be trusted? I don't.
I am not sure what you are saying. What does the HTML excerpt prove? What else can we deduce from it other than the fact that the page calls update_data2.php in some predefined intervals?
We do not know anything about update_data2.php, for all we know it could be either generating random numbers, or be linked to some secret backend system that holds real time count of consoles sold (highly unlikely).
The site is probably bogus, sure, I am just a tad confused by the code excerpt and how it is useful in proving anything here.
Where did I try to prove something? It's just to show the URL
http://www.nexgenwars.com/update_data2.php?
which is updated every minute, duh. I don't go further than "please use your common sense against these fishy things!", not to mention the 660,395 sales number of Wii at the time of this post was 520,000 10 hours ago and they both appear to surpass the whole shipment number of Wii at the launch day.
People tend to forget that the xbox360 hasn't had a "true" holiday season yet.There's nothing crazy about (at least) 13 million WW by the end of June 2007.
In Europe they can use every sale they can get. I wouldn't be surprised to see a price drop when the PS3 arrives. By 50 Euro or something...
scooby_dooby
Legend
Are you serious? You honestly can't see ANY other reason MS might drop the price before Sony does???
Some people never cease to amaze me. If MS drops teh price, they sell more units. They sell more units > they sell more software, they sell more software > they get more games, they get more games > they sell more units....see how that works??
Everything in the world is not relative to the PS3 pricepoint.
MS will drop the price as soon as demand starts to lag and they need to generate better sales. Probably this spring.
WTF. I'd be quite worried as MS if sales start to tail within the 1st year, they don't have amazing market penetration as-is. If MS drops the price they sell more units I agree, BUT they've said themselves they want to make a profit on the H/W, NOT games/XBL. If Moore has also said the cost to produce the 360 this year has gone up I don't see any reason why they'll slash the price...
I wouldn't be worried, the market for a $400 and even for a $300 console is still quite limited.
Take a look at this, you can see how different Sony's pricing strategy has been in different regions; small price cut in Japan 18 months after the launch, big one in the UK after only a year, then a big one in the US 18 months after the release.
The point is, MS is perfectly fine to cut as much as $100, even from the Core system, in May 2007. But they can probably get away with a $250 Core and either a $350 Premium or a $400 with a game or some other stuff bundled (perhaps even the HD-DVD player, without a movie, if it seems to gather some momentum). The PS3 will still retail for at least $450-500 for the 20GB version, and it'll still be supply limited at that time.
Take a look at this, you can see how different Sony's pricing strategy has been in different regions; small price cut in Japan 18 months after the launch, big one in the UK after only a year, then a big one in the US 18 months after the release.
The point is, MS is perfectly fine to cut as much as $100, even from the Core system, in May 2007. But they can probably get away with a $250 Core and either a $350 Premium or a $400 with a game or some other stuff bundled (perhaps even the HD-DVD player, without a movie, if it seems to gather some momentum). The PS3 will still retail for at least $450-500 for the 20GB version, and it'll still be supply limited at that time.
Excuse me?
Of course it makes sense to lower the price of the 360 next year.
1. There is a finite number of customers at $299, let alone $399. History tells us that. Even if there has been a shift upwards (i.e. $299 in 2000 was worth more than today), the fact remains that the majority of console sales pick up as you begin to engage the typical gamer. Launch pricing and software appeals to a much more narrow segment of consumers.
2. Sales of the Xbox 360, while good, are not outpacing supply. The emergence of two new consoles will not help this much. An integral part of the industry is supply channels, and maintaining a steady flow of product is important in cost reduction and cost control. e.g. a drop in price in March will give a significant boost to spring sales that otherwise would NOT occur. This keeps demand high as well as giving Publishers confidence to release titles throughout the year.
3. Looking at the PS2 as an example of "out a year ahead of everyone else" MS is due a price drop. This is how you dictate the game: You launch early, establishing your home turf and setting up a library of "budget games" for year 2. Publishers treat you as the base platform and you receive early defacto exclusives. As the competitors trickle in you then control the price points.
It may seem absolutely stupid to you, but Sony didn't "need" to drop the price every year. So why did they? They were waaay ahead of MS and Nintendo in install base, exclusives, publisher support, and gross number of quality games. They did it to expose their product to new customers who would found the previous price unappealing (see #2), they did it to even supply channels, and they did it to make a move on their competitors.
4. The Wii is $249 and based on the hardware inside the Wii (just look at it) there is no doubt in my mind it will drop below $199 in 2007 and Nintendo will still be making a profit on each unit sold. Like it or not, Wii is competition. It doesn't look next gen, but just today I had 2 family members over Thanksgiving strike up a discussion about it--one my mother (!) and the other a PC gamer who likes to take jabs at consoles whenever he can yet found the courage to rave about the controls and how he is picking one up. He considered the other consoles (no KB/MS is a downer) but the Wii offers him something new. People think too rigidly about this stuff: People want a device to be entertained in front of their TV. There are cinematic expereinces and interactive ones. While there are many facets to these products the Publisher and title support overlap and at the end of the day a Wii purchase is, for most casual consumers, a vote not to get a 360. Wii may help MS in Japan by competing with Sony, but in the US it is a marketshare struggle. Allowing the Wii to become the affordable console while sitting at $299/$399 -- with $149-$199 Wiis running around -- will mean HUGE losses for MS.
5. Sony has themselves in a precarious position--basically where MS was last gen. Sony has a large HDD standard as well a HD optical drive. By reducing their console price it makes Sony choose: Give up marketshare to MS -- because at $499/$599 Sony won't keep up with a $199/$299 360 -- or follow. Call it returning a favor, or call it influencing Publishers. Sony has went from the 2 time going on eternal champ to showing even the mighty can fall (see: Atari, Nintendo). MS needs to convince Publishers that now is their time and that they can be trusted to lead the industry. Publishers see one thing: Green. Green = Large install base. MS, nor Sony, are going to reach massive install bases to properly support the R&D investments of EA, Ubisoft, SE, Namco Bandai, Capcom, Sammy Sega, and so forth without expanding the install base. Financial losses mean less to go around to make better products which in turn make more moeny. The PS2/Xbox/GCN are clearly dieing -- Publishers are going to jump on whatever platform(s) have immediate as well as long term returns. MS has a chance to outpace Sony early, ensuring strong support throughout the generation.
6. It is all about the games. Publishers and MS make money on GAMES. But this isn't necessarily linear. e.g. MS may have out 5 internal titles in year 1, 10 in year 2, 15 in 3, 20 in 4, and 25 in 5 years. As new titles come out they are able to bundle and bargin bin games, maximizing profits. Further, Publisher support accellerates. The 100 360 titles in 2006 will be 300 titles in 2007 and 600 titles in 2008. That is a lot of royalties. A LOT. The key is ensuring a high degree of sales--you do that through maximizing install base. As good as games may be next year, MANY of their CURRENT console sales are based on the expectation of those very games. Most people didn't buy a 360 to play PDZ -- they bought it to play Halo 3. Further, Halo 2 sold just shy of 8M units. MS knows they need to branch out from relying on a couple franchises. The rest of 2007 looks good, but a lot of them are new franchises of unknown quality (Mass Effect, Blue Dragon, Lost Planet, Lost Odessey, Too Human, Bioshock, Alan Wake) or sequals to good games with good, but not exceptional, sales (e.g. Forza which sold ~1M units on Xbox1). Fable, Wolfenstein, Halo Wars, Banjo seem to be a bit off yet. BiA3, MoH:AA, Assassin's Creed, GTAIV, and so forth are all multiplatform. So in regards to really proven franchises in 2007 MS has Halo 3, Splinter Cell 5 (if not delayed), and Forza Motorsport 2.
I have a hard time beliving that those titles will carry MS to 13M-15M by the end of June especially since many Halo fans already bought the 360 with the expectation of Halo coming. Yet since the name of the game is profits, and the more games sold = more profits, you have to maximize the install base. This is NOT a 2 year race, but a 5-6 year race (with a LOT of cash available in years 7-9 if you survive). Maximizing the install base early means a much bigger pool to reap from in the end of the generation as well as allowing Publishers to sell more software early -- and thus more royalties.
Assuming an $8 royalty, if MS has an end of generation attach rate of 11 instead of 10 with 50M consoles sold that is $400M. If the extra game is a MS game it is closer to $40 each ($2B). But what if MS only sells 40M units because they are too conservative early on. The pool shrinks, but also there would be a trend of lower attach rate as consumers will have had the platform on average less time.
Everything financially screams "Install base".
7. MS's costs. 65nm Xenon and Xenos are coming which will reduce die size by about half as well is improve yields. 55nm eDRAM is also 2007 from NEC. GDDR3 700MHz is becoming quite common (the PS3 and Wii both seem to use it as well) so economy of scale will help with those long term contracts. MS has been making noise with their advertising unit (formerly Massive). The Xbox 360 was designed to engage in constant cost reduction to save MS money as well as give them the ability to be aggressive in positioning their product.
There are always launch window titles that are very good, even years later. PGR3, Oblivion, GRAW, FNR3, Kameo, Condemned all stand out from that window. If I had gotten the $100 Amazon deal I was picking up PGR3 as the 1 game I was buying. Not GOW, not R6:Vegas.
When you throw down a couple hundred for a console, another $50 for a controller (egads... and memory card?!), etc... sometimes you need to cut corners elsewhere. A lot of the friends I have actually wait for budget games because they don't feel $50-$60 for a game is a good investment when 6-12 months later they can get it cheaper.
Better hardware as in their hardware is getting better, i.e. more reliable. They will be increasing sales because the early launch stuff -- that kills early adopters, errr innovators (sorry LB) -- will be ironed out and consumers will have more comfort spending money on hardware they know with a high degree of certainty WORKS.
It made no sense when Sony did it with the PS2, yet they did for all the reasons and more listed above.
If you play to make a profit in year 2 you lose in year 5. MS ha already altered their "start being in the black" date from 2007 to 2008.
Oh, I don't have that problem.
I called the first delay in Spring 2005, most spotted shortages this Summer, and I think it is absolutely certain that Europe won't see the PS3 in early spring. I dare say that Europe may not see the PS3 until next Fall I think at this point Fall 2007 for a real launch is more likely than Spring. Sony has massive obligations to NA and Japan to still meet. By ramping up Europe for a March release they are only trickling units into areas. Yes, supply will improve over time as it did with the 360, but that is months away. The PS3 has a HUGE user base and NA is going to be very competitive. For whatever reason Europe has been more forgiving of delays and such. If it comes in spring it will be a paper launch. I expect Sony to pull a PSP.Lets see a link where MS said they want to make a profit on HW in 2007.
FINALLY! Someone spells it out. I wish i could say all that stuff as well as you just did! The amount of people who don't understand why a price cut isn't necessary, or is, and why pricing isn't always competitor related is amazing. Nice post
Uhh, didn't Sony wait until MS dropped the Xbox price before they ever dropped the PS2's price? Sony didn't follow a scripted, yearly price drop. They left the $299 price point on the system as long as humanly possible and only budged when there was a competitor. They actually sold an embarrassingly large number at that highest price. Ultimately, though, they let MS set the pace on price drops last generation. Part of the reason was to maintain the illusion of technical parity and value against a stronger platform.
Bottom line, MS will not drop the price until sales slow to an unacceptable level (which wont be for a while if we're going with the theory that MS benefits most from the PS3/Wii shortages) or Sony gives them some pressure on pricing. There's no question that you reach a new group of consumers when you drop your price, but those people will still be there, whenever your price gets dropped.
scooby_dooby
Legend
Other way around actually. Sony forced MS's hand by dropping early. Every single year.
http://en.wikipedia.org/wiki/Xbox
http://en.wikipedia.org/wiki/PlayStation_2
In the UK they dropped $100 after only 10 months, when the XBOX wasn't even on the market.
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