I'm surprised I have to explain this one to you
- forwards compatibility. The next machine is 3 years later and provides an upgrade path. We're looking at ditching the fixed hardware and moving onto software platforms, even streaming gaming. 5 years after next-gen, 2018, is possibly the last hardware gen, if not the next one.
How does that make sense for software developers or consumers?
You make a compelling case here and frankly, I could see some success if MS/Sony went with a lower tiered approach ($200 BOM, $200 MSRP)
But it would not stir the imagination of the public as new consoles typically do.
I firmly believe that the top priority as a hardware maker in this day and age is to create desire. Marketing can surely help in some regards, but you can only shine up a turd so much.
Remember, pricepoint isn't the roadblock it once was in years past ... the market today for disposable income is far more accepting of $500+ devices/toys, mostly thanks to Apple.
It's not like a somewhat lower spec'd machine means the core gamers ditch XB3 completely, not unless PS4 is a monster. If both machines are similarly spec'd, the only other place for gamers to go is PC. Maybe the loss from XB360 to XB3 would be 10-20% of gamers who want the very best. If MS can significantly grow the rest of their userbase, it's no great loss. It's all a matter of degrees.
And this point on collusion (Sony or MS wouldn't release a woefully underpowered competing machine without knowing what the other would do)...
If gamers aren't interested, they aren't interested. Bottom line, the games industry is not a necessity.
Some might say, "I think for the money, I'll go with Sony this time. They have franchises I'd like to play that I missed out on, and the online is free".
Some might go PC (raises hand) which opens a Pandora's box of unpaid games ...
Some might say "eh, I'll keep my old box ... " - With a three year window and underpowered hardware, the likelihood of new games not supporting the old consoles is slim.
Worst case scenario, they say "screw it, the experiences are the same as what I've seen over the past 7 years, the graphics look roughly the same, I think I'll go ipad, with cheap games ..."
Point is, there are other options ...and not all of them end up putting money in MS' pocket.
It doesn't have to be a choice between hardcore and casuals. The majority of console gamers are neither. The majority buy consoles when they are cheap and old tech, to play some gamers. This is the core of the console business. Onto that core you can lead with some hardcore gamers in the first years, and hang some casuals off the end, or even branch out into a very casual market. But the core don't disappear just because the machine isn' the most powerful ever, or because it can run Kinect games.
True, but they do disappear when they are no longer interested in the offering.
In MS' case, they are enjoying a highly profitable venture. They have convinced tens of millions of gamers that their online service is worth a regular yearly fee... even with ads now. Also convinced them to use their box for their media consumption.
All of which took place because they initially inspired those users to buy the box in the first place with teasers of Gears of War and thoughts of what else is possible if Gears can look that good.
As I said, there are other options ... and that is one heck of a golden goose to risk gambling away ...
Perhaps, although technology should be able to get more performance for $200.
Indeed.
But at this point, xb360a's BOM has to be somewhere near the $100 mark. You want mass adoption? Drop the xb360a's MSRP to $100 (no monthly fee/contract) and add whatever bells and whistles you want to xblg and watch the money roll in.
The best weapon in MS' arsenal to target the mass casual audience is the xb360a.
If all they care about is movies, music, online features, social, and a bit of gaming ... that's xb360a. And no matter how cheap the xb720 hardware design is, none of it will match the xb360a's value offering.
Okay, but I hope you agree that install base is everything, and
if low-priced hardware can outsell high-performance hardware (factoring in the issue of long-term price reductions, which is a doozy), then low price is the choice to make. That's an if on whichi you always side with "it's not gonna happen" and which I just recognise exists without trying to guess whci way it'll go.
I do agree it is everything.
However, I propose that a multi-generational approach can capture far more than a muddled middle-ground one size fits all. It's why despite all of Apple's hype, android still sells more. Targetting different market segments for their needs.
xb360 for the low end/casuals
xb720 for the high end
The high end of yesterday becomes today's casual.
When yesterday's casual (6770) becomes today's high end, is when gamers start to feel played/abused/used/tricked and at that point, I'm not sure how many would be willing to pony up the $50/yr anymore. I'm not sure how many would stay an audience for MS to stream ads to. I'm not sure how many would buy games from their marketplace. And I'm not sure how many would use those former advantages as a reason to buy into an MS ecosystem for other devices...
I don't know how many, but I do know that it's less than now.
New customers that might be interested in MS console offerings? If they weren't interested in lower priced consoles which do all the periphery (outside of games) that the new ones do, I'm not seeing how they will be inspired to buy the more expensive model which offers roughly the same experiences and only marginally better games...