Xbox 360 internal HD-DVD drive shocker?

[scooby_dooby]

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. Tthere 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. 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.

Your entire argument is based on the assumption that MS has finite resources, and that the budget for cost reduction on the core and premium models would be affected by investments in the creation of this new AV model. What basis do you have for this claim? In other words, why must a single dollar be "taken away" from cost reduction on the core model? Couldn't they simply allocate more money for R&D?

Is it not a possibility that the R&D team charged with cost reduction on the Core and Premium models have a set budget, with a set size, that would not be effected at all by the creation of a 3rd SKU?

BOM cost-wise, it's going to be worse than Sony, especially without the volume for say 60Gb HDD and blue ray diodes.

I just don't see how you can make this statement. Back in 2005 the cost of the 360 was targeted to be reduced by 50% within the first year, do you know if this is the case? RSX is larger and by al lreports more expensive than the ATI GPU. CELL larger and more expensive than Xenon. The HD-DVD drive *might* be cheaper to produce than a BR drive, and is if current prices of standalones are any indication.

With so many unknowns, how can you make a definitive statement that it will always cost more than the PS3?

I'm sorry but MS just cant match a 599$ ps3 feature by feature

first of all we dont know every future of the media capabilities
nomatter what drive you put in the xbox, it will ALWAYS be stuck with DVD size for GAMES.
they betterm trow in a free toshiba standalone hddvd player in 2008 with every xbox sold.
and devs should always make sure there game is playable on a harddiskless Corepack also.

While you're right that for GAMING, 360 will never match some of the options available on PS3, from a AV standpoint it can, which is what I'm discussing. From a consumers standpoint, they would offer the same functionality, MS could even 1up them by bundling a larger HDD which would muddle the consumers perception even further.

And then there's the option of seamless networking with your home PC setup, which the PS3 will probably never offer, which could be used as an exclusive MS marketing point.

The most interesting angle here is, if HD-DVD wins the format war, MS will probably lead this console generation. BR won't cost reduce as fast as it should, PS3 loses a major selling point, and Sony probably won't be able to lower the price fast enough to compete. So, in a sense, MS does have alot to gain if they can stop BR from winning. Wait.....I said I wouldn't go here!

 

[patsu]

Your entire argument is based on the assumption that MS has finite resources, and that the budget for cost reduction on the core and premium models would be affected by investments in the creation of this premium model. What basis do you have for this claim? In other words, why must a single dollar be "taken away" from cost reduction on the core model?

Nope... it's about opportunity cost even if you have infinite resources. I'm talking about getting there faster. The sooner MS get there, the better. If MS truly has infinite resources, where is USD 299 premium pack today ? It is a business afterall... not a street fight.

Is not a possibility that the R&D team charged with cost reduction on the Core and Premium models have a set budget, with set a size, that would not be effected at all by the creation of a 3rd SKU?

Sure, but this is only a small part of the entire operation ? I have also mentioned other repercussions internally and externally at little benefits. Why do it (especially now) ?

I just don't see how you can make this statement. Back in 2005 the cost of the 360 was targeted to be reduced by 50% within the first year, do you know if this is the case? RSX is larger and by al lreports more expensive than the ATI GPU. CELL larger and more expensive than Xenon. The HD-DVD drive *might* be cheaper to produce than a BR drive, and is if current prices of standalones are any indication.

Sure, you're talking about the cost of 1 of those device. You also need volume to calculate the real unit price. We were comparing BOM cost for the hi-end model with PS3. If the hi-end model has low volume compared to 1.2 mil PS3 per month, it will likely be more expensive to produce per unit. We are talking about custom 60Gb HDD to fit into Xbox 360 shape, blu-ray diodes and HD-DVD stuff, WiFi, plus other minor parts. I don't even know whether the hi end model need a different power supply or cooling solution or not.

With so many unknowns, how can you make a definitive statement that it will always cost more than the PS3?

See above. How many hi-end units do you think MS can sell ?

While you're right that for GAMING, 360 will never match some of the options available on PS3, from a AV standpoint it can, which is what I'm discussing. From a consumers standpoint, they would offer the same functionality, MS could even 1up them by bundling a larger HDD which would muddle the consumers perception even further.

Sure... MS could do many things, but should they ? To the consumers, the distinction has already been made: Blu-ray vs HD-DVD, PS3 vs Xbox 360, motion sensing vs rumbling controller, PS3 games vs Xbox 360 games, ... It's not just 1 attribute. Once the gamer has saved the money to buy either, the chance is 50/50 compared to previously, the buyer can just go for Xbox 360.

And then there's the option of seamless networking with your home PC setup, which the PS3 will probably never offer, which could be used as an exclusive MS marketing point.

Why not ? Xbox 360 just use SMB to talk to PC. Windows Media Connect is supposed to be DLNA compliant too. MS is a monopoly on the PC side. So MS will have to be careful about closing things against competitions too.

 

[expletive]

Nope... it's about opportunity cost even if you have infinite resources. I'm talking about getting there faster. The sooner MS get there, the better. If MS truly has infinite resources, where is USD 299 premium pack today ? It is a business afterall... not a street fight.

I dont understand this at all, are you saying that if MS comes out with an HDDVD version it will take them longer to drop the price of the core system?

 

[patsu]

I'm saying if MS comes up with a hi-end HD-DVD model as a third SKU to compete with PS3, it can hurt them more than help them.

And one cannot use "infinite resources" to argue for MS because if they can, the simplest answer for MS is to fund the loss and get the USD299 premium model out the door tomorrow.

There are better moves than releasing a 3rd SKU.

 

[expletive]

I'm saying if MS comes up with a hi-end HD-DVD model as a third SKU to compete with PS3, it can hurt them more than help them.

And one cannot use "infinite resources" to argue for MS because if they can, the simplest answer for MS is to fund the loss and get the USD299 premium model out the door tomorrow.

There are better moves than releasing a 3rd SKU.

Was there an answer to my question tucked away in there somewhere?

 

[patsu]

Was there an answer to my question tucked away in there somewhere?

Which question ? You asked me whether...

I dont understand this at all, are you saying that if MS comes out with an HDDVD version it will take them longer to drop the price of the core system?

I replied with my key points. So essentially, no that's not what I meant per se. MS can certainly go ahead and cut price by funding the loss directly for example. But this does not mean that MS won't get burnt by the 3rd SKU, or the 3rd SKU won't affect the momentum of the existing SKUs.

 

[a688]

Which question ? You asked me whether...

I replied with my key points. So essentially, no that's not what I meant per se. MS can certainly go ahead and cut price by funding the loss directly for example. But this does not mean that MS won't get burnt by the 3rd SKU, or the 3rd SKU won't affect the momentum of the existing SKUs.

I don't understand your arguments either. You keep saying Sony is saving money by sourcing parts internally when that doesn't guaranteee a cost savings at all. Then you talk about a 'custom' 60gig HDD, which I have no idea what you are talking about since they use generic SATA laptop drives. Then you go about directly comparing the "high-end" xbox360 to the high-end PS3 even though there is no reason to do so. MS also doesn't have to worry to much about "being a monopoly" on the PC side when connecting to the xbox since the xbox isn't a monopoly last time I checked. Also, people saving up money to buy a Xbox arn't really "in danger" of purchasing a PS3. If they were, Sony should be scared since everybody w/ less than 600 bux is "in danger" of purchasing a xbox.

 

[patsu]

I don't understand your arguments either. You keep saying Sony is saving money by sourcing parts internally when that doesn't guaranteee a cost savings at all.

For high volume items, Sony should be able to save money by sourcing internally (without middlemen). For limited items like Blue laser diodes, they can also source for it internally at cost... or it's a matter of money going from left hand to right hand.

Sony also has other hardware units, so they can combine their procurement into more strategic purchases.

Then you talk about a 'custom' 60gig HDD, which I have no idea what you are talking about since they use generic SATA laptop drives.

Assuming Xbox 360 keeps its casing. I presume the 60Gb removable hard disk will need to use the same plastic cover as the current 20Gb one. The hard disk itself is of course standard.

Then you go about directly comparing the "high-end" xbox360 to the high-end PS3 even though there is no reason to do so.

That's what scooby wants to do. Not me. If you compete head-on, that's what happens.

MS also doesn't have to worry to much about "being a monopoly" on the PC side when connecting to the xbox since the xbox isn't a monopoly last time I checked.

MS will need to worry if it has proprietary stuff on the PC that only Xbox can use but its competitors cannot.

Also, people saving up money to buy a Xbox arn't really "in danger" of purchasing a PS3. If they were, Sony should be scared since everybody w/ less than 600 bux is "in danger" of purchasing a xbox.

Unfortunately, that's what it means. For the second case -- Sony is indeed in danger of its potential customers buying an Xbox, especially if PS3 stock is limited. For the first case, once a consumer has the money to buy either an Xbox 360 or a PS3, the chance is 50/50 assuming all else being equal. Previously, if he can only afford XBox 360, PS3 is less of a threat.

 

[Crayon]

MS said no HDDVD games.

MS says lots of things.

Tricking/forcing you into buying the multiple versions of the same unfinished products is what MS does best.

The limitation of DVD for games is becoming obvious.

Here's step one:
1) Exclusive projects take advantage of HD media on PS3 with a notable improvement in quality.

I won't spell out the other steps, but they involve third parties having to get multiplatform games up to snuff on PS3. This line of reasoning spells bad news for 360.

I'm not saying it'll happen! But I wouldn't be the least bit suprised it MS tries to grandfather-in HDDVD as the primary format for the 360.

 

[A176]

Well, not anything anything, but certainly enough for a 2X HDDVD drive. Won't be enough for long though when these drives start kicking up some serious speed, which will happen soon enough...

I was referring to the notion that external usb enclosures usually do not hit anywhere near the speeds of an internal connection (atleast, from what I've tested with my external ide enclosures). I don't know if this is related to usb chipset performance however.

Further, the HD DVD drive would have to be atleast 3x (3.5) to match the 12x DVD data rate of the current drives, possibly even more if taking access times into account. Thinking of the lackluster usb performance I've experienced gives me doubts about the viability of an external high data rate drive for games.

 

[function]

Tricking/forcing you into buying the multiple versions of the same unfinished products is what MS does best.

Like the version of Windows XP I bought nearly 5 years ago that's still current? Or the even older version of Word that still works just fine? Or the Xbox I bought a few years back that still works just fine and that they never forced me to upgrade in any way at all? Or all the free stuff like IE and WMP that I've never had to pay for even once?

What experience do you have of MS tricking/forcing you into buying multiple versions of the same unfinished products?

The limitation of DVD for games is becoming obvious.

It doesn't have an anti FUD lock-on system?

I wouldn't be the least bit suprised it MS tries to grandfather-in HDDVD as the primary format for the 360.

It would certainly suprise MS.

 

[scooby_dooby]

The limitation of DVD for games is becoming obvious.

How so?

 

[scooby_dooby]

I'm saying if MS comes up with a hi-end HD-DVD model as a third SKU to compete with PS3, it can hurt them more than help them.

And one cannot use "infinite resources" to argue for MS because if they can, the simplest answer for MS is to fund the loss and get the USD299 premium model out the door tomorrow.

There are better moves than releasing a 3rd SKU.

I'm sure MS's pricedrop's for the Core and Premium are already planned out by now and would not be affected one way or another by the creation of a 3rd SKU. You don't think MS has this all roadmapped? Your argument that this would somehow 'set back' the pricedrop's of the other units leaves alot to be desired.

Some extra development costs for a 3rd SKU is in no way comparable to subsidizing millions of units, so that comparison is not very relevant. Sure the Hi end sku may cost more because it has lower volume, but it still could share all the main components with the core and premium models and would take advantage of all those cost savings.

Really, MS's pricing structure is not my concern, but a 3rd SKU to compete directly with the hi-end PS3 would certainly have a beneficial affect for MS, and negative one for Sony if they can match the $600 price imo, it is also perfectly doable for MS especially if Toshiba is willing to source the drives near cost.

 

[Crayon]

!

I'm not going to get into all that. I don't feel like it.

My point stands. I personally would not be suprised if we start seeing HDDVD games. The statement carries little weight and doesn't justify any weak attempts I could muster to sell it to you. Lets leave it at that.

 

[Crayon]

How so?

Here I could of sworn I qualifed that statement as being my own opinion. But it looks like I didn't. Sorry, my bad there.

Devs are talking it up, there's rumors and at least one confirmed (Resistance) is using the space. In the past, when devs have taken advantage of larger media, the games improved markedly. That happenned every time. It may just be my opinion but it strikes me as rather obvious. If you want to continue that conversation, we should probably dig up one of the existing threads. I warn you tho, I don't have much more to say about it that hasn't been said.

 

[patsu]

I'm sure MS's pricedrop's for the Core and Premium are already planned out by now and would not be affected one way or another by the creation of a 3rd SKU. You don't think MS has this all roadmapped? Your argument that this would somehow 'set back' the pricedrop's of the other units leaves alot to be desired.

It will be counter-productive. The other way to say it is: the ROI isn't there (including the anticipated negative impact on Sony).

Some extra development costs for a 3rd SKU is in no way comparable to subsidizing millions of units, so that comparison is not very relevant. Sure the Hi end sku may cost more because it has lower volume, but it still could share all the main components with the core and premium models and would take advantage of all those cost savings.

Really, MS's pricing structure is not my concern, but a 3rd SKU to compete directly with the hi-end PS3 would certainly have a beneficial affect for MS, and negative one for Sony if they can match the $600 price imo, it is also perfectly doable for MS especially if Toshiba is willing to source the drives near cost.

If you say so. It is not my job to sort this out
Thanks for not jumping though. i was kinda expecting rude posts already.

 

[scooby_dooby]

Here I could of sworn I qualifed that statement as being my own opinion. But it looks like I didn't. Sorry, my bad there.

Devs are talking it up, there's rumors and at least one confirmed (Resistance) is using the space. In the past, when devs have taken advantage of larger media, the games improved markedly. That happenned every time. It may just be my opinion but it strikes me as rather obvious. If you want to continue that conversation, we should probably dig up one of the existing threads. I warn you tho, I don't have much more to say about it that hasn't been said.

Whether the space would be used was never a question, it's whether it will make any signifigant difference in the quality of the games, and that remains to be seen.

 

[fireshot]

Why is this a shocker? It is a rumor and no more an optional SKU to a highend PS3/PSX2 Sony will release. It all about cornering different market segment.

Are we still sure that PS3 production will be cheaper just because Sony is manufacturing internally? Didn't we all thought Kutaragi was just tactical when he warned PS3 is gonna be expensive? PS3 is not gonna cost an arm and leg because Sony is producing inhouse...i heard that excuse before.

 

[patsu]

Are we still sure that PS3 production will be cheaper just because Sony is manufacturing internally? Didn't we all thought Kutaragi was just tactical when he warned PS3 is gonna be expensive? PS3 is not gonna cost an arm and leg because Sony is producing inhouse...i heard that excuse before.

Compared to an equivalent hi-end model by MS... the answer is probably yes. If it's more expensive to source internally, Sony has the option to buy it outside. If it's cheaper to do it internally, Sony has the option to execute too. Based on the context of this thread, a low volume, hi-end model will be more expensive to make than a high volume PS3 assuming Sony has reached volme production.

On top of that, Sony has other critical mass to leverage on (e.g., HDD may be used by other Sony devices).

PS3 is expensive for different reasons. Pricing != cost of manufacturing.

 

[fireshot]

How sure are you sure of?

Any case, the hi-end 360 or Xbox PC is not gonna compete with 60GB PS3, it will be in a different market...