Final confirmed Jan NPD's

[TheChefO]

Well there are so many unkown parameters in there so our speculations are actually a bit ridicolous.
Just a few details, such as the edram requiring an uncommon potentially more expensive process, the Cell being a standard component could help bring the price down through higher production volumes as weill

Then we have all license fees, we just don´t know the size of:

360
Xenon - IBM
Xenos - ATI
EDRAM - NEC
DVD - ?

PS3
RSX - nvidia
Bluetooth - Bluetooth consortium (probably dirt cheap chips through some Sony-Ericsson deal)
XDR/FlexIO - Rambus
DVD - ?

The most tangible feature is the standard harddrive of the PS3, but as long as no one can show me proof that the core unit is the most sold SKU (or close to), then I think that is a moot argument.
Downloadable content will continue to grow in importance for both the 360 and the PS3, which will make the 360 core model an even more unattractive deal in the future.

I am pretty sure that if MS had known Sony would make the HDD a standard feature, they would have done the same thing, but that was one of the cards that Sony kept close to their chest until spring last year.

I agree in general that there are many unknowns. I feel pretty safe though assuming ps3 will always have a higher BOM for their core.

Two things:

1) MS pays no licensing fees for their gpu or cpu. They are paid in full designs completely owned by MS. The only license fee for xb360 AFAIK is DVD playback.

2) Core will fly off the shelf if marketed right.

Let me give you a few examples:
"Xbox360 core bundle with Halo3 for $250" next Christmas.
"Xbox360 core bundle with GTA4 for $250" next Christmas.
"Xbox360 core bundle with Forza2 for $250" next Christmas.

 

[Geo]

Are you making a distinction between licensing fees and royalties? (and, if so, err. . .why?)

Edit: And, btw, I don't know if we know the terms of the recent work that ATI did for the HD DVD player. One time fee or what?

 

[TheChefO]

Are you making a distinction between licensing fees and royalties? (and, if so, err. . .why?)

Edit: And, btw, I don't know if we know the terms of the recent work that ATI did for the HD DVD player. One time fee or what?

Not intending a distinction as both are payments for someone elses idea and add to the cost of a console.

HD-DVD fee from ATI I imagine is paid through the add-on as it's a useless feature without the drive.

Can you shed some light on these BOM figures Geo?

 

[Geo]

Not much, other than to guarantee you that ATI is getting a royalty for every Xenos, and that I think it unlikely they licensed Avivo for free. :smile: That's almost certainly per copy too, tho it might possibly be that the SD version is/was rolled into the Xenos royalty, while the HD DVD version is tied to HD DVD players rather than every base unit.

The main beautiful thing MS got from "owning" Xenos, was the ability to fab it themselves so that they 1). Took a profit partner out of the middle of the fab processing and 2). Got all benefits from process shrinks, and 3) Made BC for XBOX720 a little easier, probably. Even so, it's pretty likely that they pay AMD/ATI for engineering assistance for process shrinks. But that would be one time kind of payments rather than ongoing (except to the degree that the process shrinks are ongoing, of course, 65nm, 55nm, 45nm, 32nm, etc). But even one time payments are going to be impacting BOM, even if not as "licensing or royalties".

 

[Teasy]

NPD Canads sales #'s are out for Jan, it's actually far below the usual 10% ratio:
Wii 34,000
PS2 27,000
360 14,400
PS3 6,800

Only 7000 PS3, I guess that $699 pricepoint is just way to much to handle.

Could be a supply issue though, not a single futureshop in town has one in stock.

Already posted them, but glad you did anyway since everyone seems to have missed my post

 

[TheChefO]

Not much, other than to guarantee you that ATI is getting a royalty for every Xenos, and that I think it unlikely they licensed Avivo for free. :smile: That's almost certainly per copy too, tho it might possibly be that the SD version is/was rolled into the Xenos royalty, while the HD DVD version is tied to HD DVD players rather than every base unit.

The main beautiful thing MS got from "owning" Xenos, was the ability to fab it themselves so that they 1). Took a profit partner out of the middle of the fab processing and 2). Got all benefits from process shrinks, and 3) Made BC for XBOX720 a little easier, probably. Even so, it's pretty likely that they pay AMD/ATI for engineering assistance for process shrinks. But that would be one time kind of payments rather than ongoing (except to the degree that the process shrinks are ongoing, of course, 65nm, 55nm, 45nm, 32nm, etc). But even one time payments are going to be impacting BOM, even if not as "licensing or royalties".

Thanks Geo, :smile:
So gpu/cpu design royalties are a standard practice then even if the design is "owned" by the buyer?

 

[Geo]

Thanks Geo, :smile:
So gpu/cpu design royalties are a standard practice then even if the design is "owned" by the buyer?

Yup. I don't think the general outlines of Nvidia's deal with Sony for RSX is all that different in that regard (unlike Nvidia's deal with MS for XB1, which was quite a bit different, and painfully so for MS). MS would have, most likely, paid more in one time engineering fees upfront for Xenos due to it being a fully custom design, rather than the partially custom design that Sony licensed from Nvidia. But once its in production, so far as I can see both deals are royalty-per-chip, plus engineering fees for any further specific assistance requested (like process changes).

 

[Crossbar]

2) Core will fly off the shelf if marketed right.

Let me give you a few examples:
"Xbox360 core bundle with Halo3 for $250" next Christmas.
"Xbox360 core bundle with GTA4 for $250" next Christmas.
"Xbox360 core bundle with Forza2 for $250" next Christmas.

Yeah, that sounds appealing, but I am not really convinced that the Core version at one point will sustainably become the prefered choice among the customers, because of some bundles, in that case why isn´t it that already? I mean the price difference is already there.

If you offer the same game bundle with the Premium version with a $50 higher price, do you think the majority of the customers would go for the core version?

 

[TheChefO]

Yeah, that sounds appealing, but I am not really convinced that the Core version at one point will sustainably become the prefered choice among the customers, because of some bundles, in that case why isn´t it that already? I mean the price difference is already there.

If you offer the same game bundle with the Premium version with a $50 higher price, do you think the majority of the customers would go for the core version?

Not at all, it would be a Christmas seller for gift convenience.

The only reason Core is looked at as a poor value is the pricing of periphs which is adjustable. If it came stock with hd cables and a wireless controller or if the periphs dropped price significantly the core would maintain significantly higher sales than currently.

Having said that, I have no hard numbers either way of sales for xb360core vs premium.

 

[Corwin_B]

IIRC, Peter Moore stated that Core was key to MS strategy for reaching specific price points first (although Wii certainly disrupts that strategy), and later when they look at emerging markets where low price is absolutely necessary (I think he mentioned India specifically), while still being able to turn a profit at the end of the console's life (he mentioned the HDD as being impossible to cost-reduce below a certain point).

 

[Rangers]

Having said that, I have no hard numbers either way of sales for xb360core vs premium.

Well, I qouted earlier that a report on these Jan NPD's stated the average selling price on hardware, it was 598.something on PS3 and 392.something on 360.

So obviously, not many core units of either stripe are being sold.

It really surprises me a few more 360 core's aren't sold. I still see a strong presence for it at retail. Just by that you'd assume it would pick up 20% share or something.

But yeah, the point of the core is to hit that 199/149/129/99 price point faster..

 

[scooby_dooby]

Yeah, that sounds appealing, but I am not really convinced that the Core version at one point will sustainably become the prefered choice among the customers, because of some bundles, in that case why isn´t it that already? I mean the price difference is already there.

If you offer the same game bundle with the Premium version with a $50 higher price, do you think the majority of the customers would go for the core version?

I don't understand why people don't have any faith in the Core's ability to sell down the road.

Last generation, PS2 was essentially a core system, with an additional meory card required, and it's sold 100million units. Surely there is a sizeable chunk of the population that does not care about a HDD...

 

[Crossbar]

IIRC, Peter Moore stated that Core was key to MS strategy for reaching specific price points first (although Wii certainly disrupts that strategy), and later when they look at emerging markets where low price is absolutely necessary (I think he mentioned India specifically), while still being able to turn a profit at the end of the console's life (he mentioned the HDD as being impossible to cost-reduce below a certain point).

It would be interesting to know what timeline he had in mind for those reductions and what kind of competition he envisioned at that stage.
He probably had the PS2 in mind, which left a bitter taste, probably being the reason he flip-flopped from the standard HDD of the Xbox. Maybe he is right that in India the PSTwo will be a major competitor, he may have a point there.

Edit:Sony may just let the PSTwo cover the low end of the market (and the developing markets) and have the PS3 to cover the upper end, Microsoft is trying to have the 360 cover the middle ground and have a bit of both. If you today look at the prices of the consoles it certainly looks like that.

 

[RobertR1]

I don't understand why people don't have any faith in the Core's ability to sell down the road.

Last generation, PS2 was essentially a core system, with an additional meory card required, and it's sold 100million units. Surely there is a sizeable chunk of the population that does not care about a HDD...

True but the PS2 was not as heavily dependant for Online play for the full effect. The HDD becomes critical once you plug it into Live, not to mention game updates/patches/content.

 

[scooby_dooby]

True but the PS2 was not as heavily dependant for Online play for the full effect. The HDD becomes critical once you plug it into Live, not to mention game updates/patches/content.

True, but I don't understand this idea that 100% of last gen gamers are suddenly going to care about Live!

Even now, attach rate for XBLive is only 60% according to MS. There is a huge market for a competetively price Core if MS makes some slight changes to the package. Add a wi-fi controller, and fix the memory card issue (give at least 256-512mb for $40)

 

[Corwin_B]

It would be interesting to know what timeline he had in mind for those reductions and what kind of competition he envisioned at that stage.

Found it !
http://www.1up.com/do/newsStory?cId=3146236

He mentioned the Core being needed from 2007 onward, reaching emerging markets like China or India, and reaching a $79 price point, which they couldn't do with XBox 1.

Fun question from the interview is "1UP: So are you saying Virtua Fighter is going to come to Xbox 360?"

The whole interview is an excellent read, especially with hindsight.

 

[Johnny Awesome]

The NPD numbers are interesting. I thought the PS3 would at least outsell the X360 for one month after the supply issues were resolved, but apparently Sony's brand isn't strong enough to make people want a system that costs $600.

Still though, I wouldn't be too quick to sound the death knell for PS3 just yet. I'm still of the belief that the Sony 60GB unit will not end up costing more than $50 more to make than a Premium X360 in the long run. The addition of BR + Sony strong branding should make this offering still pallatable to consumers. In other words, I think the PS3/X360 price gap will eventually shrink from $200 to $50. It's all going to boil down to how quickly Sony can do this and bring out some compelling content as well.

I also believe the Wii is not going to sustain the momentum it has gotten from launch in the US/EU markets. I think once gamers realize that Nintendo isn't going to flood them with software again this generation or cater to half the genres they crave, that they will start looking at the Wii as a side show. Something to be enjoyed as a second/party console, but not the meat and potatoes of their gaming diet. I still expect them to make some inroads with consumers new to gaming, but I don't think grandma is going to buy a Wii, even if she likes playing it at family gatherings. Nintendo will be successful though and live on to bring us Wii 2.

 

[tongue_of_colicab]

MS and Sony never flood their consoles with software either. Its 3rd party devs that should flood consoles with games. Its not totally nintendo's fault for 3rd pary's dropping GC like a brick almost from the start. But Wii seems to get pretty decent support so I dont think Wii will lack games. If sales keep up games will come.