Semantics, you're talking about the X360 losing a pricing advantage vs. PS3. Those were
scare quotes BTW.
Were did I say 360 would lose a price advantage?
Oh, I saw what you said I just can't believe you're saying it....
I don't quite understand you here; why is it hard to believe?
To me if it was say $10 or less than OK, not so bad. But ~$50? Particularly in mid generation when there have been 1 or 2 price reductions down to $350-$250? Thats too much IMO... Doesn't that wipe out all the profits from their games and then some (they get ~$10 per game sold right? and have an attach rate of something like 3-4 games per console right?)?
Mesyn, you're confused. I'm talking about a BOM differential with MS; what does price cutting have to do with that figure? Sony will price it where they do - that's not what my $50 spread was referring to. (For the record I think that spread is higher than $50 at the present time though)
And what happens when these consoles hit the late period in this generation with more mainstream pricing @ $200-$150?
Again, I'm not sure what this has to do with anything. But what I am saying, is that if the PS3 is perpetually priced $50 more than the premium 360, it will probably at no time be losing significantly more in its manufacturing. I think a PS3 priced $50 above the mainstream 360 model is a reasonable place for the console to sit from a value standpoint in the eyes of the consumer, though obviously their respective software offerings are what will create the demand for either console in the first place.
.....
EDIT: The above came out wrong, because it assumes that MS maintains the same level of loss on the unit as they presently endure. But as I said, I believe that the cushion from software and accessory sales would be what allows them to get more aggressive in pricing, thus perhaps expanding the level of loss endured per unit and potentially keeping Sony from being able to match the move. The emphasis is on the greater range of supports MS can draw on, however, to put a floor beneath its moves, rather than the manufacturing costs, where I feel that the gap will continue to narrow.
MS could get away with losing billions because of their OS division, but Sony would get hurt alot more if they tried that game, especially when they went into this generation expecting to clean up.
MS cannot afford to lose further billions on the XBox project; it is an internal mandate at this point. You can be assured that every effort on their part is being made to see the years going forward be profitable. That's not mutually exclusive with price drops by any means, or saying that they won't drop the price by more than Sony, but it is a present statement of fact that the days of being able to 'afford' multi-billion losses in gaming is over for the time being at least at MS - everything has been geared towards ensuring the division turns profitable in the current fiscal year.
