I don't understand your logic at all here, how would the presence of a hi end model slow the overall volume of units sold? It's simply another option for users to purchase, the premium and core will not stop existing. As for component shortages, why would there be any component shortages in 2007 at all? I don't see that bein an issue at all other than the HD-DVD drive itself, which would obviously only effect the availability of that model.
It is opportunity cost.
The premise of Xbox 360's approach is that by reaching the USD299 sweet spot (Talking about the premium model here), MS can pull away from Sony in terms of sales. By doing an additional hi-end model, it slows MS in the following way:
* For every dollar spent on the existing premium model, MS can reach that goal by lower its cost further/faster, or improving its content attractiveness. The multiplier effect is an increase in overall premium package sales. Now for every dollar taken away from this and invested into hi-end model, MS will slow the premium momentum and at the same time, they still have to fight this hi-end mess (e.g., Will consumers just buy a standalone brandname HD-DVD players instead of the combined hi-end model ? How does the hi-end compete with PS3 head-on ? How many hi-end vs existing units do MS's partners stock on their shelves ? Do MS's existing manufacturing partner need to change their process to accommodate hi-end models ? How many places do the parts need to go now ? etc.
* MS has to invest additional resources developing and marketing another slower moving model (How does it recover these cost ? Will these hi-end model justify for the investments ?). Instead of making it a simple decision for people to buy a Xbox 360, it may be more complicated now. There will be people who decide to wait and save up for the more expensive model (instead of just buying the existing ones at lower price). But once they save up, they can also consider buying a PS3 now. MS opens this up by literally endorsing/acknowledging the importance of HD (making people feel that the hi-end model and PS3 is the real thing). When Steve Jobs returned to Apple, he streamlined Apple's 10-15 models into just a minimal 4 (pro desktop, pro laptop, home desktop and home laptop) to consolidate the sales and production, plus simplify the buying process. I don't think consoles are complicated enough to deserve that split into 3 models yet. MS will have to look at their marketing data to decide.
* As for component shortage... in MS's case, it may be wistful thinking in the mean time.
It depends on MS's content pipeline and production forecast, if they can reach the 299 price point earlier, then they should sell better. The contention in parts I mentioned is a console lifecycle thing. It is not fixed to year 2007 by any means (except for HD-DVD parts).
If anything it would increase the volume of units sold, as some purchasers would have a viable alternative to the top-end PS3, and would make that switch. I can't envision any scenario where the introduction of this model woukld cause them to lose sales.
See above.
They still have a signifigant headstart, and MS is on track to hit 65nm by early next year as well. Without knowledge of what he BOM is for 360 vs PS3, and without knowledge of how th e BOM of a HD-DVD drive compares to a BR drive, you cannot say that "MS can not compete with Sony" you simply don't know that, and are essentially assuming that because Sony is a 'hardware company' than none of the other factors matter, i.e. higher price of CELL, higher price of RSX, higher price of BR, 360 cost reduction after 12 months, none of that matters because Sony is a 'hardware' company...I don't really buy that logic.
Sure but Sony can source many parts internally, which will shave the middlemen cost and some overhead away. You were saying you want to compete with Sony on the hi-end as well. So the hi-end will need to match PS3 feature for feature. BOM cost-wise, it's going to be worse than Sony, especially without the volume for say 60Gb HDD and blue ray diodes.
Also, here's another factor to consider. MS can afford to take a greater loss on their hi-end model than Sony. Why? The Core and Premium will still make up the bulk of the sales, Sony is stuck eating these losses on 100% of the units they sell.
Yes, this is something I already considered. Like I said, if the volume for hi-end is not there, it's just a waste of MS's time and resources. And if the volume is large, MS will risk losing even more money. Why not spend the money on XBL and software ? Sony has ways to recover from Blu-ray regardless of whether MS lose more/less money on HD-DVD.
