MS: "Record Revenues" thanks to 360

[Qroach]

I think Sony has a faster chance to drop prices because Blu-Ray will drop faster than normal compoments.

I don't agree that blu ray is going to drop in price quickly. It took 5 years for DVD to drop in price, and increase in popularity. I think the blu ray drive along with the hard drive in the PS3 are two components that will drop slowly over the course of this console cycle.

What would be even worse for sony is if Blu ray is not accepted as the format of standard. I know a lot of people are saying blu ray will win,but hearing the porn industry is going with HD-DVD makes me thinks that format will become the dominant one.

 

[Shifty Geezer]

I don't agree that blu ray is going to drop in price quickly. It took 5 years for DVD to drop in price, and increase in popularity. I think the blu ray drive along with the hard drive in the PS3 are two components that will drop slowly over the course of this console cycle.

To be exact, Rangers said

I think Sony has a faster chance to drop prices because Blu-Ray will drop faster than normal compoments.

That is, the BRD drive will drop in price faster than a DVD drive or HDD or memory will. And that's likely true, given the very high starting price at the very beginnings of mass production. It may not drop to the same price as a DVD drive within 5 years, but it'll price drop faster.

 

[Arwin]

I don't agree that blu ray is going to drop in price quickly. It took 5 years for DVD to drop in price, and increase in popularity. I think the blu ray drive along with the hard drive in the PS3 are two components that will drop slowly over the course of this console cycle.

I don't think you can compare the transition of incompatible formats to the transition of compatible formats though.

 

[borowki]

I think Sony has a faster chance to drop prices because Blu-Ray will drop faster than normal compoments.

That hasn't been true historically. It took many years for the price of CD-ROM to drop to a reasonable, and as Qroach said, it took DVD a number of years too. The fact that Blu-Ray requires a red/blue diode means it unlikely that prices will fall quicker. The technology for making one is far more sophisticated than that for red laser diode.

The format war clearly doesn't help. If HD-DVD wins then Sony is stuck with a costly permanent handicap.

The lack of a harddriveless SKU will also hamper them. Microsoft was never able to effectively cost-reduce that.

My point is, as ms has been hammering all this time, who has the EARLY lead is crucial. That gets you games support, which then snowballs, into an assured later lead.

There is no denying that, but at the same time, you can't just look at quantity and not quality. Someone who buys at $399 is more valuable than one who buys at $299, since he will likely spend more on games and accessories in the future. Almost by definition, you'd have a tough time extracting money from cost-conscious consumers. So you can't make take a big initial loss if you hope to make a profit from them.

In my view, the Xbox 360 install-base has achieved critical mass already. The software sales figures show that any triple-A title will sell in excess of a million copies. No third-party publisher can ignore that. Making a game PS3-exclusive would essentially mean throwing away ten million dollars.

People will forego 199 purchase for a perceived better value at 299. But they wont go to 399 or 499. 399 and 499 are out of the mainstream.

[/QUOTE]

I disagree. Price cuts becoming increasingly effective the lower the prices go, simply because they get bigger in percentage. From $199 to $299 is a 50% jump, while $299 to $399 is a 33% jump. They also become more powerful because you're moving down the income ladder.

 

[acaeus]

There is another "value" of the xbox products that must not be overlooked: market dominance. If game development for the xbox 360 is similar enough to game development for the PC, and I'm sure that's what MS wants, developers will find it easier and see more value in targetting the PC/xbox base.

Difficult to quantify how much this dominance is worth, but My guess is that MS has a pretty good idea.

 

[Shifty Geezer]

That hasn't been true historically. It took many years for the price of CD-ROM to drop to a reasonable,

Again, it's not so much about dropping a reasonable amount as dropping faster. It might take BRD 10 years to reach $20 a drive, but the rate of price drop for the next year might be $40 versus $0 on MS's DVD savings.

The lack of a harddriveless SKU will also hamper them. Microsoft was never able to effectively cost-reduce that.

That'll add $30 to the minimum price. Thus instead of $100 for a console in it's final years, it'll cost $130. $30 isn't too bad, and isn't enough to be a deciding factor in itself. You're not going to buy Console A for $100 instead of Console B for $130 just because it's $30 cheaper.

 

[TheChefO]

Again, it's not so much about dropping a reasonable amount as dropping faster. It might take BRD 10 years to reach $20 a drive, but the rate of price drop for the next year might be $40 versus $0 on MS's DVD savings.
That'll add $30 to the minimum price. Thus instead of $100 for a console in it's final years, it'll cost $130. $30 isn't too bad, and isn't enough to be a deciding factor in itself. You're not going to buy Console A for $100 instead of Console B for $130 just because it's $30 cheaper.

Agreed - $30-50 difference isn't much at the end of a consoles life cycle. However one must take into account future software available on said platforms. How many GC's/Xbox's sold compared to Ps2 last year?

If one assumes ps2 level games selection for ps3 over wii/360 this gen, then one can safely assume the ps3 at $30-50 premium over their competition will sell extremely well. However if one consideres software selection at this time to be different than ps2 vs xb/gc then one can expect a different sales ratio no?

 

[Shifty Geezer]

It's not just software, but other features too, like whatever download services you like (which actually wants an HDD, so you'd have the same $30 price on XB360 too!), who has those particular exclusives, who had the HD disc format you want, who has the online community you like, who has PVR and built-in web browsing, etc. $30 won't matter squat, either now or in 5 years time, only if both machines are perfectly equal and a buyer has no brand preference, where they'll pick the cheaper option because it's cheaper. That won't happen though because the rest of the systems are so different that those become the deciding factor.

 

[TheChefO]

It's not just software, but other features too, like whatever download services you like (which actually wants an HDD, so you'd have the same $30 price on XB360 too!), who has those particular exclusives, who had the HD disc format you want, who has the online community you like, who has PVR and built-in web browsing, etc. $30 won't matter squat, either now or in 5 years time, only if both machines are perfectly equal and a buyer has no brand preference, where they'll pick the cheaper option because it's cheaper. That won't happen though because the rest of the systems are so different that those become the deciding factor.

Assuming these extras become an integral part of the buying decision I can see your point and they will come into play. However at the sub $150 price point isn't it safe to say a larger majority of these consoles will be bought as secondary/kids console?

 

[Shifty Geezer]

At that point, the software libraries etc. (mostly street cred I think by then) will still be the governing factor. There may be a few grannies who are looking just for a games machine, and choose the $30 cheaper one. In almost all cases Jonny will be asking for one by name, based on features+games, without regard for that extra $30 one machine costs above another. And I doubt when buying parents will buy the console not asked for just because the alternative is $30 cheaper. They certainly didn't last gen!

 

[TheChefO]

At that point, the software libraries etc. (mostly street cred I think by then) will still be the governing factor. There may be a few grannies who are looking just for a games machine, and choose the $30 cheaper one. In almost all cases Jonny will be asking for one by name, based on features+games, without regard for that extra $30 one machine costs above another. And I doubt when buying parents will buy the console not asked for just because the alternative is $30 cheaper. They certainly didn't last gen!

Agreed - so whichever console has the strongest brand name / awareness by this time will have the edge. Assuming software libraries are comperable of course.

 

[Shifty Geezer]

Agreed - so whichever console has the strongest brand name / awareness by this time will have the edge. Assuming software libraries are comperable of course.

Hmmm, cutting logic there. "Which ever console is the favourite in 5 years time has the edge."

 

[AntShaw]

Again, it's not so much about dropping a reasonable amount as dropping faster. It might take BRD 10 years to reach $20 a drive, but the rate of price drop for the next year might be $40 versus $0 on MS's DVD savings.
That'll add $30 to the minimum price. Thus instead of $100 for a console in it's final years, it'll cost $130. $30 isn't too bad, and isn't enough to be a deciding factor in itself. You're not going to buy Console A for $100 instead of Console B for $130 just because it's $30 cheaper.

I will have to disagree with this. $30 IS quite a large cost for a componenet, especially at the end of its cycle. Especially for a component that can't reduce in price. That could be the difference in taking your console from $129 to $99. The only thing you can hope out of this would be an increase in HD size over the years. Since we have yet to see it, I will wait until then.

With that being said, the HD will always be a factor in the price of the PS3. While at least with the core package, this won't be a limiting factor on how low they can take the price at the end of its cycle.

 

[TheChefO]

Hmmm, cutting logic there. "Which ever console is the favourite in 5 years time has the edge."

cute

Which console has the strongest brand name / awareness currently? Sony's Playstation3 or Microsoft's XBOX360? Which one is selling more?

It isn't just a matter of brand name or awareness.

 

[borowki]

Again, it's not so much about dropping a reasonable amount as dropping faster. It might take BRD 10 years to reach $20 a drive, but the rate of price drop for the next year might be $40 versus $0 on MS's DVD savings.

The point is that the drop for the optical drive isn't going to out pace that of the silicons. To a large extent, the pricing of Blu-Ray is pegged to the adoption of HDTV--since you get no benefit from one without the other. It's a much smaller market compare to that of DVD (anyone with a television). Fewer companies will invest in order to making it, hence there won't be a rapid price drop.

That'll add $30 to the minimum price. Thus instead of $100 for a console in it's final years, it'll cost $130. $30 isn't too bad, and isn't enough to be a deciding factor in itself. You're not going to buy Console A for $100 instead of Console B for $130 just because it's $30 cheaper.

[/QUOTE]

The beauty of the low-end SKU is that it lets you squeeze more money out of the cheapskates later. A sizeable portion of those with the Core System will at some point realize that they really need the hard-drive and/or wireless controller. The prospect of income from future add-ons means you can price the base part more aggressively. That's classic console economic.

Microsoft will beat Sony soundly on price in this round. And for the moment I don't need threats from the latter in other fronts. Microsoft should just stay focused and continue to execute.

 

[assen]

BTW - what about flash memory? Will it be feasible at some point to offer a "Core" PS3 with, e.g. 8 GB of flash which will hand the games' expectations for storage, while being cheaper than HDD technology at some point. Games are certainly not expecting to have the whole 20 GB for themselves, so they could possibly run on a console with less. 8 GB USB flash drives are currently around $110-130 on Amazon. This articles claims an annual rate of 30-40% of price decrease for flash storage, and if that holds for three more years, the "PS3 slim" of 2009-2010 may have 8-10 GB of flash storage below the minumum price of a HDD (quoted to be in the $30-50 range).

 

[Shifty Geezer]

cute
Which console has the strongest brand name / awareness currently? Sony's Playstation3 or Microsoft's XBOX360? Which one is selling more?

What exactly is your point? I mean, why do you keep revisting this same info in so many threads? You seem to be writing a lot that is very obvious and taken for granted, while not being particularly on topic unless you're very generous with your definition's.

Yes, by the end of this gen, the console with the most brand awareness, best software library, cheapest price, best services, and largest install base, will 'win'. Yes, if MS have that, they win. If Nintendo get that, they 'win'. If Sony get that, they 'win'. At this point in time MS are 'winning'. And in any and every thread, you can throw out the hypothetical question 'what if this company gets such and such instead' which will lead to the hypothetical answer 'they will 'win''.

That info can be added to all the threads if you wish, but it gets tiresome, certainly to me. Dunno about anyone else. Generally different threads deal with different aspects of the consoles. This one was talking about unit costs and minimum costs, and more recently the impact of an HDD on minimum price and it's affect on buying habits. Why then start talking about which console's selling most? How does that follow on from the prior discussion about HDD prices?

 

[TheChefO]

What exactly is your point? I mean, why do you keep revisting this same info in so many threads? You seem to be writing a lot that is very obvious and taken for granted, while not being particularly on topic unless you're very generous with your definition's.

Yes, by the end of this gen, the console with the most brand awareness, best software library, cheapest price, best services, and largest install base, will 'win'. Yes, if MS have that, they win. If Nintendo get that, they 'win'. If Sony get that, they 'win'. At this point in time MS are 'winning'. And in any and every thread, you can throw out the hypothetical question 'what if this company gets such and such instead' which will lead to the hypothetical answer 'they will 'win''.

That info can be added to all the threads if you wish, but it gets tiresome, certainly to me. Dunno about anyone else. Generally different threads deal with different aspects of the consoles. This one was talking about unit costs and minimum costs, and more recently the impact of an HDD on minimum price and it's affect on buying habits. Why then start talking about which console's selling most? How does that follow on from the prior discussion about HDD prices?

First of all I said nothing of "winning".

The point was what impact will this $30 difference have at the end of a console's life. You and I both agree $30 isn't much of a difference and should not affect sales one way or the other. Games selection and (to a smaller extent in my opinion in this price range) services will be the deciding factors. Brand awareness will also help nudge sales but brand awareness/momentum is ever changing based on sales and software available.

And sorry I didn't realize future sales trends weren't allowed to be discussed in a thread titled "MS: Record Revenues thanks to 360" but hdd costs for ps3 were ok.