Network now...NEWS
Microsoft Stands By Add-On Strategy
After having having the "biggest December" for the Xbox brand, Microsoft is convinced that it made the right decision in adopting a modular strategy for Xbox 360 add-ons.
Xbox 360 group PR manager David Dennis told Edge, "Our strategy from the beginning was to have multiple SKUs with a very flexible offering so the customer can choose the experience that they want. If you don't need a hard drive, you're not forced to have one. If you don't need Wi-Fi, you're not forced to pay for one."
His assertion comes days after Sony Computer Entertainment America criticized Microsoft for "peddling add-ons" to consumers. Sony argued that PS3 had more out-of-the-box value than Xbox 360.
Microsoft's three-model strategy includes a hard drive-less Xbox 360 Arcade, a 60GB Pro and a 120GB Elite, with prices ranging from $199 to $399. PS3's standard 80GB model sells for $399, and includes features such as a hard drive, Blu-ray and built-in Wi-Fi.
But Dennis suggests that having multiple console configurations has made Microsoft more agile in a market filled with cash-strapped consumers.
"The strategy of having a console that is $200 more expensive that has features that people don't potentially need or want but have to pay for--looking at [Sony's] sales numbers--I'd say it's probably not the winning strategy at this point, especially given the current economic situation."
NPD Group reported Thursday evening that Xbox 360 sold 1.44 million units during December in the U.S., while PS3 sold 726K.
Microsoft recently told Edge that it expects Sony to drop the price of the PS3 within the next few months. Analysts are also anticipating a price cut sometime this year.
But Sony, which at this point is focusing on profitability over installed base, is trying to hold out on a price cut as long as possible.
Dennis added, "At the price point we're at and the content that we've got, we feel like we have a lot of momentum going into 2009."
It's been a while -- happy belated new year! I saw your article today about Microsoft's add-on strategy and thought you might want to hear our perspective at SCEA.
We absolutely support consumer choice with the PS3, offering the entry-level $399 SKU and a $499 SKU that includes a larger hard drive and great gaming content. Where we differ from the competition is that we're committed to delivering the best gaming and entertainment experience with a system that not only has the latest technology like Blu-ray and Wi-Fi built-in, but is a reliable device with a 10-year lifecycle. It's this approach to offering both the best content and high-quality hardware that has led to the PS3's install base growing 40 percent in 2008.
For the more price-sensitive consumers in the market, they're continuing to look at PlayStation 2, which is a great value at $129. The PS2 is still selling well in its ninth year, and the 50 million owners out there have trust in PlayStation that our platforms will be around for at least a decade to provide the entertainment they're seeking.
Let me know if you have any questions or would like to discuss this topic further.
UPDATE: Sony Touts Reliability, Longevity
In a game of PR ping pong, Sony PR manager Al DeLeon responded to Microsoft's claims in an e-mail saying, "We absolutely support consumer choice with the PS3, offering the entry-level $399 SKU and a $499 SKU that includes a larger hard drive and great gaming content.
"Where we differ from the competition is that we're committed to delivering the best gaming and entertainment experience with a system that not only has the latest technology like Blu-ray and Wi-Fi built-in, but is a reliable device with a 10-year lifecycle."
He noted that the PS3's installed base grew 40 percent in 2008.
DeLeon added that the $130 PS2 remains a viable option for entry-level consumers. "The PS2 is still selling well in its ninth year, and the 50 million owners out there have trust in PlayStation that our platforms will be around for at least a decade to provide the entertainment they're seeking."
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Add-On's aren't my concern regarding Microsoft's system, as someone who doesn't own a 360/PS3/Wii yet, it's the reliablity that's the issue for me.
With the new Valhalla chip set (CPU/GPU on one chip) coming out at the end of the year, i'm hoping a slim version of the 360 get's announced at E3 this year.
If not, the 360 will remain a non-purchase for me until MS sort out the yield on the system as it's currently only at 92% i.e. Jasper model, therefore there are still manufacturing problems that MS need to fix.
I'm a PC gamer first, but when MS release the more reliable, 100% yield Valhalla chip set, then i'll be the first on board to play games i can't otherwise play on the PC.
I like how Microsoft have made their equipment modular so you only buy the bundle that suites your needs. My only real gripe with their hardware is, Microsoft choose to limit you to only using their hard drives.
With my PS3 this is not problem; you can drop pretty much any 5200rpm laptop drive in, format and start to use it. So if like me you bought a 40 GB version last year and have filed it already. Something like this 500 GB Samsung Spinpoint would certainly do the trick(The Xbox elite truly would be elite if it had one of those Samsung drives installed from the factory). In terms of price it's top value for the performance rating and storage capacity. However with my Xbox (Arcade) which has 60gb HD, the only option open is the Xbox 360 120GB Hard Drive, in term of value for money is poor at best.
I know you can get utilities that allow you to add external storage or flash firmware, but to be honest I'd rather not have a paperweight. Surely just a simple addition of a format utility is all that is required to add in your own storage solution with out invalidating your terms and conditions.
For the record, there are non-Microsoft, general purpose wireless adaptors out there which cost much less and work just as well with the Xbox 360.
As somebody who keeps his Xbox near his router, the idea of paying for a wireless adaptor as part of the console package when I will never use it is a little ridiculous to me. I prefer to get the full speed of the broadband I pay for rather than the diluted, interference-prone wireless connection others use, and even if my Xbox wasn't next to my router I'd have happily ran a cable across the house instead.
But for those who want wireless, the option is there for them - even if Microsoft's own offering is a little on the dear side. But as I said, there are alternatives to Microsoft's hardware that will do the same job as well, if not better, while costing less.
The only real rip-off here is with the hard drive, for which you have only two options - buy Microsoft's ridiculously expensive (seriously, in an age where you can get hundreds of gigs for less than a hundred quid, charging so much for such small drives is criminal) hard drives, or mod your console and therefore be in breach of the EULA. This isn't so much of an option if you value your LIVE account.
As for the rest of the peripherals on offer for the 360, it's really irrelevant. The HD-DVD drive is defunct, the play and charge kit is reasonably cheap and there are non-Microsoft versions for this as well, the Messenger keypad is ridiculously expensive but rather unnecessary for anybody with a headset, and extra joypads, I think at least, are priced reasonably. I don't even remember what the other add-ons are, so I can't imagine they are too important.
For the record, there are non-Microsoft, general purpose wireless adaptors out there which cost much less and work just as well with the Xbox 360.
None of those "solutions" are particularly easy (especially compared to the standard proprietary dongle solution) or well-documented. More importantly, none are officially supported.
even if my Xbox wasn't next to my router I'd have happily ran a cable across the house instead
Sick of this BS argument; please retire it (you, too, Nickgamertag01) and come up with another. Personally, I use my LIVE connection about 90% for marketplace and Netflix, maybe 10% for actual online gaming and don't feel like I should have to pay $100 for the privelege of doing so on my wi-fi network. But even that doesn't matter: plenty of people do game over wi-fi connections and this whole notion that "real" gamers do so only with a hardwired connection is a load of crap.
Even if these arguments were valid, it still doesn't excuse Microsoft for charging $100 for a $5 part like the bunch of arrogant greedheads they are and always have been.
Err... I bought the wireless adapter on ebay for like $55 and ended up going back to my cable and sold it to a friend, its just that my modem was next to my Xbox and when my borther was using his laptop it got a little slower than if using the cable. Plus my friend needed it more than me since his Xbox was nowhere near his router.
What can I say? I tried it and ended up preferring the cable. Guess you can count me in with the other guys for my BS argument but I got to say, its the truth. Now don't get me wrong I do believe that the wireless adapter its really expensive but at least in my case if it was only $50 new I would have sold it anyway and went back to the cable, sorry but that just my preference.
I don't think it's an insignificant amount of game players that prefer to have their consoles connected via a Cat-5 cable over wireless, I'm also a strict believer in wired internet connection yielding better performance (I have a 100 foot Cat-5, 80 feet of which is being used and tucked under my home's floorboards).
And personally, if I can save even $5 (or whatever the cost would be) on a feature I won't be using, I'm all for it.
But I do agree, the wireless adapter is extremely over priced. At this point it should cost $50, max.
Off topic, but related to the discussion about the Cell/360 CPU discussion way bellow (I believe it was this article), Gamasutra has an interview with one of the IBM engineers that wrote a book about the development of the Cell and 360 CPUs by IBM, and how in a way the R & D for the Cell, made the 360 CPU possible. http://www.gamasutra.com/view/feature/3904/processing_the_truth_an_inter...
Third page he even "answers" the question about which console is more powerful (he worked on both the Cell and the 360 Xeon). An interesting read if you have an interest in hardware or would like a tiny bit of insight into the story behind the development of the Cell and Xeon.
To be fair, if I didn't already have my back surround speaker and subwoofer speaker wires going from my TV area to my couch it would be a humongous pain in the ass to wire my spare 360 and PC.
My argument is that whenever I tried to hook up my laptop, DS, or Wii to my wireless router it seemed I was always getting connection problems, disconnects, etc. That could have been attributed to user error, but I'm not very knowledgeable in that area (getting better) so for me sticking essentially a plug and play cable into my devices is the most convenient (with my surround/entertainment setup) way for ME. As I said before, if I didn't have a huge lay down carpet that goes between my TV and couch (L shaped couch, so the couch that is not parallel to my TV functions as a perfect wire-hider), I would have gone wireless for my PC (fuck my 2nd Xbox, not buying a wireless adapter for my spare box unless my wife starts playing Halo again).
So huge ass (cheap) plug and play cable going through your house (or conveniently under a carpet and couch) or a mild/moderately difficult (somewhat expensive) wireless adapter to go along with the additional cost of the wireless router over a wired one. Pick your poison. Either one kinda sucks (not for me ^^).
To note: people with surround sound have been figuring ways around long cables for a long time (I have 4 cables, subwoofer, rear left, rear center, and rear right). So an Ethernet cable or two can just fit snuggly alongside your established wire system. Some people by wireless speakers, but I've had wired speakers for about 8 years so I'm used to it. I don't think either way is really any better (or worse) than the other.
I think you ignore that mandatory installs are a GOOD thing, especially when you have a fast optical drive to pair it with
They speed up gameplay and allow larger textures and less pop-in
PS2 has mandatory installs because the blu drive has a bad seek time
Do you realize that you just contradicted yourself, Bickle? The reason PS3 has mandatory installs is precisely because it has a slow optical drive. If you have a fast optical drive there's no reason for a HD install. Consumers should be given a choice as to whether they want to use up a significant portion of their HD installing a game.
Regardless of the speed, I much prefer to copy my games to the HDD now that NXE supports it. Playing a game in the middle of the night with the jet engine noises coming from the DVD drive was annoying.
I just wonder if you play your games on mute or something, is it because its the middle of the night and you don't want to wake people up? I say that because when I play late at night I do turn the volume a little down but not so low as to only hear the Xbox drive noise. When a game is loading and there is no sound I do admit its loud but once the game starts the volume from the game is all I hear.
I don't mute it, but I do turn it down a bit to keep from waking up the wife, kids and dog.
Some games access the drive quite frequently, especially those which stream objects or textures (NFS, Oblivion, etc.) I can hear fairly well with the TV volume down low, but I had to turn it up to compensate for the drive noise before NXE. That, of course, meant dealing with Microsoft's overpriced 120GB HDD upgrade.
The copy-to-HDD feature helps Microsoft in a number of ways. First, it helps reduce DVD drive failures, reduces heat generation, reduces noise, and prevents disc crashes due to lack of foam pads in older drives. Second, it helps generate new sales of their 60GB and 120GB HDD accessories. Personally, I'd rather pay a few dollars for an empty HDD cage which allowed me to use any SATA drive I wanted.
The non standard hard disk was a good move by Microsoft. It allows them to price more aggresivly and also has prevented mandatory installs. At the end of the day you can play all but a couple of games without the hard disk.
The only thing non-standard about the disk is the security sector that Microsoft puts on it solely to keep you from using reasonably priced upgrades. You can mod several models of 20GB, 60GB, and 120GB third-party drives to get them working on a 360 for less than half of what Microsoft wants.
I may be well known to prefer my 360 on this site, but I won't lie -- I wish the HDD was standard from the get-go and didn't have to plague programmers. That said, though, I'm kind of glad that it's detachable, which makes it much easier to play Rock Band at a friend's house (just slap on the HDD and log in and all my downloaded tracks are playable).
On the other hand, the 20gigs just ain't enough, and the price for the upgrade is ludicrous (though there's a way to buy your own HDD and place it in the frame of your old HDD). Nonetheless, at least I *can* upgrade withotu buying a whole new console -- PS3'ers are left cold.
One's gotta wonder though -- the most feature-less console is winning. So do features really make the console anyway?
Lol..... Might want to know your consoles the teeniest tiniest bit before making rash statements.
You can upgrade the PS3. The hard drive is held in by two screws, it's a standard 2.5" notebook drive. Sony have instructions on how to change it. It doesn't invalidate your warranty to do so.
I still think we're pretty lucky this generation round, all three systems are doing well - the Wii is obviously out performing the other two. Each system has it's advantages. Competition is good and will drive each company to be more aggressive on function, games offered and price.
Yeah - that's really one of the best features of the PS3. I occasionally wonder, however, if the PS3 had come out first, would it still retain all these features? Or were the origins of them (standardized hdd, wifi, wireless w/rechargable batteries, etc) simply a case of one-up-manship? Not that I mind, of course. I'd like to see enough pressure on Microsoft from the PS3 to start bundling more and more accessories into the Pro and Elite packages, as well as lowering the prices in general. I think we can all agree that any success from the PS3 or Wii that puts pressure on Microsoft's pricing/bundling to improve is a win for consumers.
@Sacktara,
I think you nailed it. Competition can only be a good thing for us consumers. I'm sure Sony would not have been so aggressive with their SKU reconfiguring, price dropping, game bundles, etc. if it weren't for MS' persistence. I also think MS has been aggressive as well especially when the PS3 started showing signs of life early in '08 when it actually outsold the 360 for a few months. I'm sure Sony will cut the price of the PS3 this year and if they start to gain any ground MS will turn around and do the same (and hopefully add a bigger HDD and chop the damn prices of the hard drives while they're at it). Now that you can fully install any 360 game to your HDD my 120 gig is done for. It’s ironic that the PS3 is the system that has an HDD come with every SKU but it doesn’t allow full game installs (with a few exceptions I believe). I’d much rather have full game installs as an option for every game instead of having mandatory installs on some games and only bits and pieces of it. Maybe Sony allowing any HDD to be used with the PS3 limits its (PS3’s) ability to install full games to HDDs due to pirating concerns? What’s to keep you from renting games, burning them, and then returning them considering you’re using whatever HDD you want? (DRM prevents you from doing that on the 360 and you have to have the game in your drive to play it from the HDD so it knows you still have the game).
Would Sony have been better off offering 1st party HDDs for the PS3 that were priced fair and only allowing their HDDs to be used instead of letting consumers buy whatever HDD they wanted? I know it's better for the consumer, but isn't that an area they could have profited from? Even at a fair price that's money they're not making (I'm sure their kicking themselves for that oversight).
The PS3 had some odd choices made for it. I'm still boggled at how little RAM it has to take advantage of the amount of storage Blu-Ray has to offer, for instance. While the harddrive is good for caching, doubling or even tripling the RAM would've been better.
Except due to low BluRay drive speeds to fill up that 1 gig of ram (or more) would have taken just too long. The next systems better have at least 1 gig of ram if not 2...
You do realise that when you take the average data transfer speed for both consoles and their respective physical storage mediums the data transfer rate is roughly the same.
Harddrive helps (streaming). That being said, procedurally generated textures take up RAM too.
And in all honesty? The next generation of systems will need a lot more RAM than that, I think, depending on how aggressive they are with the rest of the hardware. I'm thinking we'll be more likely to see two or more good GPU's next go round rather than a single but highly impressive GPU.
I would be surprised if we didn't go back to cartridges for console games' next generation. Just like solid state hard drive's, flash cartridges really only offer benefits compared to optical storage. We just need the price to come down..
Hmm, that's a very interesting prospect (going back to a non-disc medium). I've never thought about that. You can get a 4 gig flash drive for 20 bucks, in theory, you should be able to get at least 12 gigs of flash for 60. I would think that having 20-25 gig drives for games at 60 bucks would be possible. Very interesting...
Arron,
I'm not TOO familiar with the drive speeds of DVD-9 compared to BluRay other than I've read that BluRay drives are slower. IF they are relatively the same, than my point still holds. Loading 4x the data would take roughly 4 times the length. Hard drive streaming/caching seems the only way around that.
EDIT: I just found an interesting hack. For a slightly difficult hack, you can replace a $150 120gig 360 HDD with a $54.99 120gig HDD. I see no reason why MS charges 150 for the exact HDD you can get for 54.99. Ridiculous. http://www.newegg.com/Product/Product.aspx?Item=N82E16822136072
I think you know where you can stick your $100 wi-fi dongle, Microsoft.
The problem is that their addons are ludicrously expensive.
A $50 hard drive for $100? $60 more for a drive that costs at most $10 more at manufacture?
That WiFi adapter costs them no more than $20 to make, and then they sell it for $100
Call me back when the 60GB HD is $69.99 and the 120 is going under 90 and the WiFi is $49.99 or less. Until that time, it's simply profiteering. All those prices allow for a healthy profit for all parties involved and reasonable prices on the consumer end.
Agreed. I mean, I understand capitalism and they can charge what they want. However, I have to admit...those prices are just insane. I looked into getting a 120gb HD with the NXE, and they charge about 140$ for it. Meanwhile, I can buy a laptob HD off newegg for less than half the price with over twice the space.
The trick being is people are still willing to pay those prices - enough people to make it worthwhile for Microsoft, anyhow. And no doubt retailers get a nice chunk of profit out of those items to boot. If you look at the 360 and how many "extras" it has for sale, all of which offer a good sized profit margin for Microsoft, wholesalers and retailers (versus new games and systems), its pretty clear to me that when designing the 360 they were direly scared of losing money hand-over-fist like they did with the original Xbox. Now? They have lots of ways to make money on things big and small, and retailers have lots of 360 accessories they can sell.
The only thing that would work, really, is for sales of those items to stop. The only item that would really work for, though, is the wifi adapter. All those extra harddrives would simply be recalled and rebundled with Arcades to make more Pro's.
nothing MS do is for the benifit of the consumer. this is the company that has dominated the PC OS and software market for over 15 years. one might ask what they are doing in the console market in the first place? the answer... to kill it. your only option as a gamer would then be to play games on a PC running which OS?
yes I know all companys sole purpose is to genarate revenu. compatition is a good thing for consumers. but MS's agressive business modle is not.
Funny, folks said the same thing about Sony when they entered the industry (don't belong). Anyhow - unlike PC games, the 360 makes money directly for Microsoft through royalties of games, accessories, DLC, etc. They even discourage PC/360 simultaneous releases, trying to get the 360 version out first (and have said as much, especially in PC dominant markets). Yes, they do have Games For Windows, but lets be honest - all the promise and potential that program has isn't really coming to fruition.
Play on a PC and Microsoft makes money (Windows sale to the OEM, maybe some software). Play on a 360 and Microsoft makes a LOT more money.
Well you are right. All these companies only care about is the bottom line.
I'm loath to admit they're right on the strategy. That being said, I wish they didn't gouge so deeply on the prices of their add-ons. I suppose losing so much money on the Xbox caused the accountants to demand something like this... what's worse, I can't complain too much since my 401k has Microsoft stock! :(
Clearly the general modular strategy is working sales-wise. To me it makes sense, my brother's a very casual game player and it really doesn't make sense for him to get anything other than an Arcade, as he only requires storage space for updates and save game files. It helps to realize that your own particular video gaming needs are not the same needs as the more casual players.
Though the part of the strategy that's BS, is the mark up of the stand alone components. HDDs and the wireless adapter in particular.
120GB Hard Drive for £99.99...fuck that, it's almost half the price of a PS3.
With the amount of peripherals out for the 360, Microsoft should have just gone that extra yard and released the CPU, GPU and motherboard seperately as well.
Microsoft, tut, tut.
Exactly, the arcade 360 may be only 200 or whatever it is in your countries (I'm in NZ) but the peripherals here like the 120 gig hd are $200. This + the arcade exceeds the ps3 and more, and you're missing blu ray and wireless not to mention superior components in general. Sony are culprits of this sort of captured market technique too, $40 8mb memory card anyone? but are making amends with PS3s more open philosophy, albeit still incredibly restricted though. However you can put certain 2.5" drives in your 360 rather easily, not that much harder than with ps3, and it doesn't void the console warranty, just need a set of allan keys and a youtube video showing you through the motions.
120GB Hard Drive for £99.99...fuck that, it's almost half the price of a PS3............................
No its not last time i checked the PS3 is £300 that 1/3 of the cost of an overpriced 120gb harddrive from MS , NOT almost half the price ? anyway its something all companys do and they make a good bit of profit out of doing it .Who remembers the price of Sony PSP memory cards they too were a total ripoff.
Accessories have always been ridiculously priced. How about $25 for an official 8mb memory card for the PS2?
I still can't believe they are sticking to that price. I saw 2 gig usb drives a couple of weeks ago for $5, why can't they drop the price on the PS2 memory card? They could at least increase the size and keep it the same price.
I dislike the modular system also, with any system. With numerous peripherals on offer at ridiculus prices, plus 3 SKU's available it's no wonder the consumers head is up their arse.
I dislike Microsoft and everything they stand for.
I hate "add-ons", Microsoft's prices on these extra peripherals is embarrasing.
I didn't realize there was even any question if this was the right strategy. The numbers confirm that this was the better approach - not just for MS but consumers too, as it is the consumers who voted with their wallets. Whether MS should have gone with the type of hard drive they chose (which inflated HD costs) is certainly open to debate, but offering a modular system has obviously worked out well. Why pay for features you don't want or need?
It's ok if the consumer never wants more but if they want to add to the base system they pay through the nose. The lack of wireless is just unacceptable and stinks of sticking it to consumers seeing how wireless will be preferred by users.
I agree with Microsoft policy of letting you choose what you want, cause like I commented that's how a friend got to buy his system, still the price for the wireless add-on is way to high and it does suck that its so expensive. A $70 price will be acceptable I guess but at this point in the console life cycle a $59 price at the very least should be the standard.
It was the right decision for Microsoft. Not the consumer!
I got a friend who got the core system first and then a few months later paid for the HDD, did he paid more than me? I guess but on the total amount compared to the pro model I got it wasn't that much and for him, at least, it was nice cause he got to play NBA 2k6 and GRAW almost as soon as the system came out. We had a good time with some on-line multiplayer matches on both games.
So you can see that maybe you pay more but some people like it that way instead of having to wait. This is not restricted to video games at all, have you ever bought something big or expensive and the store offers you payment plans? You make 6 or 12 months payments with some interest of course but you get to take it home right away. You end up paying more cause of the interests but you get to enjoy it instantly, be it a HD TV, a big sofa to watch his/her favorite show, etc. I don't know that many people that prefer to wait 6 months till they get the money to pay it all at once. Do you?
Hmmm, but if you can take out that payment plan why not get the full package straight away, and go into debt rather than buy the budget package then pay more later upgrading.
The beauty or curse (depending on the view) of the payment plan is that you get into debt but in little chunks at a time, plus that leaves you money for other important stuff like buying food and paying the bills. If you go into a big debt you are screwed for at least a month until you get paid again.
Like I said you do pay more in the long run, no arguing there, but to some people is the only and sometimes better option specially if you want to enjoy it right away.