A reader dropped us a tip asking the following good
question. Because the question and answer shed light on the console wars, we're sharing it with you.
"I recently decided that I would like to have an Xbox for my upstairs bedroom so that my fiancée can play games that she enjoys such as DDR and Psychonauts.... I have since discovered from numerous store managers that Microsoft has discontinued the core version of the original Xbox. Now instead of paying $149.99 for an Xbox, as one has been able to do since 2003, it is necessary to drop $179.99 for an Xbox packaged with Forza Motor Sport (a game made by Microsoft).... The real kicker is that the only way to buy an Xbox now is to pay $30 more than the system cost for the past 2-3 years just because it is packaged with a first party game that retails for $19.99 (new).... Since when did console makers RAISE the prices of consoles towards the end of their cycle?"
Good question. We searched Amazon, Buy.com, and Wal-Mart.com and could not find an original Xbox console for less than $170. All of the consoles found at these sites (except used consoles offered through Amazon.com third-party sellers) came bundled with Forza. Why has Microsoft chosen to restrict (or discontinue) the supply of core Xbox systems at exactly the moment when console manufacturers have tended to drop prices?
There are a few reasons why we imagine Microsoft might pursue what appears to be a perverse strategy.
The Xbox is installed in fewer than 25 million homes worldwide versus the PlayStation's estimated install base of around 100 million. At this point, no sane third-party developer or publisher is going to release an exclusive for the Xbox given the lower overall demand for Xbox games. It's also unlikely that Microsoft is going to force its first-party developers to pour resources into a last-gen console at a time when the Xbox 360 needs and requires 100% of internal support. Given the situation, the game is no longer about Xbox vs. PS2 sales. Any additional support of the original Xbox in the form of games or even price subsidies would be counterproductive.
So forget the idea that Microsoft will do anything that supports the Xbox. Heck, they're going to actively discourage Xbox sales by bumping up the price so that the Xbox 360 looks even more attractive relative to an Xbox purchase. Every prior-gen system sold at this point is lost walletshare that could have been dedicated towards next-gen gaming. The price increase is a great way to encourage recalcitrant gamers to consider upgrading to an Xbox 360.
There's some evidence that Microsoft's strategy is working. The biggest games publishers are having difficulty making money right now because demand for previous-generation gaming has dried up as gamers increasingly look toward the Xbox 360, PlayStation 3 and Nintendo Revolution. This shift in consumer demand forces developers and publishers to jettison or retool prior-gen projects and turn more squarely towards the future--a future that is so far dominated by the only console on store shelves: the Xbox 360.
Expect Nintendo and Sony to do what they can to keep gamers suckling at the teat of prior-gen systems. Neither Sony nor Nintendo are eager to cut off a revenue stream before they've launched their respective next-gen consoles. If they can keep gamers happy for just a little bit longer, they have a better chance of keeping those gamers as customers when their next-generation systems finally launch later this year.
(Page 1) Reader Comments
I know someone else who was thinking of getting one too. I'll be curious to see that person's reaction to this news.
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All other places were anywhere from $175 to even $230.
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but seriously, you make a good point, it would actually be kind of a smart move, in a business sense.
In a consumer sense however, this is bullshit.
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Your argument for why it is higher makes sense. But I have found that the VAST majority of people buying PS1s when the PS2 was so popular were people with young children.
They wanted a cheap game system that they could stick in the play room with some games. They don't care about the latest title or support or any of that junk.
To me, it seems like x-box is missing out on a big oppertunity to make young gamers (and their parents) x-box fans.
-Matt
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On the other hand, I also know resident PS2'ers that want an Xbox, but convince themselves otherwise because they could just purchase an Xbox 360 instead.
Continuing along these lines, the backwards compatibility team may be unknowningly pressed to make more updates to ensure that these consumers will be able to pick up last gen games and play them on the Xbox 360. There is probably quite a few PS2 owners that have missed out on some Xbox exclusives and the quality that the Xbox versions of multiconsole games.
There really isn't a reliable way to predict the future of converting gamers to the Xbox line. I'm still rooting for Microsoft.
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On the other hand, I also know resident PS2'ers that want an Xbox, but convince themselves otherwise because they could just purchase an Xbox 360 instead.
Continuing along these lines, the backwards compatibility team may be unknowningly pressed to make more updates to ensure that these consumers will be able to pick up last gen games and play them on the Xbox 360. There is probably quite a few PS2 owners that have missed out on some Xbox exclusives and the quality that the Xbox versions of multiconsole games.
There really isn't a reliable way to predict the future of converting gamers to the Xbox line. I'm still rooting for Microsoft.
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m3mnoch.
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As for Forza, well - clear the warehouses? I don't know.
I'm not trying to flame-bait here, just thinking about those losses and how to stitch it down if I were Microsoft...
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Micrsoft has personally noted your concerns and thanks you - you will be receiving a free 'Every 10 Minutes Mountain Dew/360' knit-stocking hat in the mail.
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I was lucky this Chistmas I was able to get a Orginal Xbox with Forza and 2 months of Xbox Live for $179 Canadian. Just the system sells for $199-$219 in Canada. I've had a lot of fun with forza over the last month. Well, when I could get the controller out of my husbands hands."But it's my Christmas gift can't I have a turn."
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Lets remember, though, this is their own fault by not understanding how to deisgn a console that can be made cheap late in it's lifecycle. So lets not not reward them for their mistakes, lest they repeat them.
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are you 12? I'm pretty sure you are 12
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On a completely unrelated note, I do believe that Joystiq exists to report news to the benefit of GAMERS, not the video game companies themselves. Regardless of your opinion on Joystiq's reporting style, no matter how fanboy-ish it may be, I'd prefer this to having today's "popular product" rammed down my throat at every turn.
Oh, and did you hear about the rumors of Marketing Shills posting on websites under an assumed and established identity in order to promote positive opinions on certain consoles...? Pretty shady, don't you think?
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This goes back to Microsoft's initial error in the way they originally designed the Xbox. Since they were in a great hurry to have the hardware established they chose to go with a modified version of a PC chipset. For Nvidia this meant an enhanced version of the GeForce 3 (all of the enhancements became part of the GeForce 4 eventually) and the MCP I/O and audio processor from Nvidia's then upcoming PC motherboard chipset. The nature of this relationship meant that Nvidia continue to own all of the proprietary technology within the chips. Rather than selling the design to Microsoft they were instead selling them the chips on a merchant basis. This is pretty much unheard of in the console business for custom chips with a single supplier. (CPUs like the standard M68K found in the Sega Genesis aren't a problem since they serve a large market rather than a single customer.) This put MS and Nvidia at odds. MS needed to cut costs on the Xbox while Nvidia, acting as a middleman between the foundry and MS, wanted to sell the chips at a profit. This meant adding a layer of cost above what there would be if MS were dealing directly with the foundry.
This also meant Nvidia wasn't motivated to invest in producing updated versions of the chips using smaller process nodes. While the PS2 chipset started at .25 micron and has been brought down to 90 nm (also integrating the EE and GS onto a single die) the Xbox chips remained at .18 micron. Smaller versions would have been much lower cost and drew much less power and produce far less waste heat. Not only couldn't MS reduce cost, this also meant they couldn't design a smaller version of the console that would have had wider market appeal. Some of the Xbox's manufacturing costs went down over its life but not nearly as much as it would if it had followed the normal course of console life cycles. Such is the price of rushing to market. (Unlike what some people say about the 360 this was very true of the original Xbox.)
But consider Forza Motorsport. Microsoft owns it outright. They could give away on streetcorners and their only cost would be for the disc, box, and manual. They wouldn't ever pay royalties on manufacturing as third party publishers do. So their cost for bundling it with the Xbox is just a few dollars but its value to the Xbox buyer is far greater. This makes for a great reduction in the loss incurred for each remaining Xbox sold and increases the chance of that unit becoming profitable as its owner purchases games. Assuming those purchases are new new rather than used.
It's as simple as that. Microsoft is just trying to reduce the losses for the last few Xbox sales.
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i have noticed, tho, there are two kinds of people in this world. those who spell the word "rediculous" and those who spell it "ridiculous."
evidently, the former group also have a bunch of knit stocking caps, keychains and water bottles.
m3mnoch.
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there is no way to make the xbox1 smaller like the ps2 because the xbox has a hard drive genius.
and to you guys that are making fun of me calling me 12yo and such, you probably work for this site. I made you look stupid didnt I?, ofcourse i did thats why you dont have a rebuttal besides making fun of me. You are the ones who are acting inmature.
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This goes back to Microsoft's initial error in the way they originally designed the Xbox. Since they were in a great hurry to have the hardware established they chose to go with a modified version of a PC chipset. For Nvidia this meant an enhanced version of the GeForce 3 (all of the enhancements became part of the GeForce 4 eventually) and the MCP I/O and audio processor from Nvidia's then upcoming PC motherboard chipset. The nature of this relationship meant that Nvidia continue to own all of the proprietary technology within the chips. Rather than selling the design to Microsoft they were instead selling them the chips on a merchant basis. This is pretty much unheard of in the console business for custom chips with a single supplier. (CPUs like the standard M68K found in the Sega Genesis aren't a problem since they serve a large market rather than a single customer.) This put MS and Nvidia at odds. MS needed to cut costs on the Xbox while Nvidia, acting as a middleman between the foundry and MS, wanted to sell the chips at a profit. This meant adding a layer of cost above what there would be if MS were dealing directly with the foundry.
This also meant Nvidia wasn't motivated to invest in producing updated versions of the chips using smaller process nodes. While the PS2 chipset started at .25 micron and has been brought down to 90 nm (also integrating the EE and GS onto a single die) the Xbox chips remained at .18 micron. Smaller versions would have been much lower cost and drew much less power and produce far less waste heat. Not only couldn't MS reduce cost, this also meant they couldn't design a smaller version of the console that would have had wider market appeal. Some of the Xbox's manufacturing costs went down over its life but not nearly as much as it would if it had followed the normal course of console life cycles. Such is the price of rushing to market. (Unlike what some people say about the 360 this was very true of the original Xbox.)
But consider Forza Motorsport. Microsoft owns it outright. They could give away on streetcorners and their only cost would be for the disc, box, and manual. They wouldn't ever pay royalties on manufacturing as third party publishers do. So their cost for bundling it with the Xbox is just a few dollars but its value to the Xbox buyer is far greater. This makes for a great reduction in the loss incurred for each remaining Xbox sold and increases the chance of that unit becoming profitable as its owner purchases games. Assuming those purchases are new new rather than used.
It's as simple as that. Microsoft is just trying to reduce the losses for the last few Xbox sales.
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Obviously companies like to make money. You're not a genious for figuring out that charging $30 more for the console bundle is going to make it easier to break even on production costs, The one. Even 12 year olds can figure this out. The timing of the increase seems pretty off to me, unless they think gradually raising Xbox1's price will help to convince people that Xbox360 is a better deal. My conclusion is: it won't sell. Buy used kids, it's not worth doing a $180 over. Har har har.
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Obviously companies like to make money. You're not a genious for figuring out that charging $30 more for the console bundle is going to make it easier to break even on production costs, The one. Even 12 year olds can figure this out. The timing of the increase seems pretty off to me, unless they think gradually raising Xbox1's price will help to convince people that Xbox360 is a better deal. My conclusion is: it won't sell. Buy used kids, it's not worth doing a $180 over. Har har har.
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by the way is used CAPS to highlight not to imply i was yelling.
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I don't think they have won any credit with their launch and strategy in Japan. Why try to make sense of their flawed business plans?
If they are really cleaning warehouses, then lower it to $100. The only people buying now are late comers that don't have much money and second system owners or replacement system owners. If they want people to switch to 360, then X the Xbox. They can't, because 360 is not backwards compat. MS is stuck. By the time owners save up enough to buy a 360 (when they are about to buy a $150 xbox now) the other systems will be knocking on the door.
I would buy a second Xbox if it was $100. But at $179? hell no.
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"Why not buy one used? There are tons in used game shop... not to mention ebay."
Because many of the parts such as DVD drives (Thompson in particular), hard drives, power supplies, etc, wear out or break down over time.
"Circuit city has it for $150 still though: http://www.circuitcity.com/ssm/Microsoft-Xbox-Video-Game-System/sem/rpsm/oid/87658/rpem/ccd/productDetail.do
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I went to the website and tried ordering one online after reading this. After putting in all your shipping and credit card information you get a message saying they don't have any even though it says "in stock". Same deal if you call and try to order over the phone. It shows up in their computers as "in stock" until after they process your order.
What I have a problem with more than anything else is that they are charging $30 extra dollars for a game that retails for $19.99 everywhere.
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You're a moron. The 179.99 price has nothing to do with it being "the only way they [Microsoft] can continue supporting the xbox1 without out loosing to much money".
Microsoft has discontinued the original Xbox. They aren't manufacturing it anymore. It's done. That means no more production costs, no more selling it to retailers, no more LOSING money on it.
Your entire comment was filled with fanboy nonsense. The word "biased", with an allowance for description of yourself, shouldn't be spoken by you. You love you Xbox. That's fine. We're all glad. Now shut the fuck up.
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on spelling: typically, i don't make fun of anyone's spelling in forums. it's an informal environment, so, there is a lot of leeway. as long as you can get the point across, i'm all good with it.
"rediculous" is a bit different, tho. it's almost becoming a word in and of itself. tho, not really like confusing "your" or "you're" or anything like that.
actually, if you search on google for it: http://www.google.com/search?hl=en&q=rediculous&btnG=Google+Search there are even 1.5 million hits.
now, unlike simply confusing hominyms, there is actually a theme amongst the "rediculous" posters. read a few on that google search. they are typically crazy and offbase. it's apparently prototypical to just ignore them.
not even "definitely" and "definately" can claim that.
sorry for the disruption. now, back to your regularly scheduled expensive-xbox discussion.
m3mnoch.
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I imagine that MS decided to look at the trends and decided that the a price drop wasn’t necessary given existing Xbox inventory. After all, some people simply prefer to buy new (esp. when it comes to hard drive based devices) and MS decided those people could pay for it if they wanted a new system. This has nothing to do with the fixed costs of system,(just like the previous price drops had nothing to do with reductions in fixed costs but rather competitive pressures) but rather a simple and straight forward pricing strategy. Sony dropped their prices on the PS1 when the PS2 came out because they still saw a market there (and one that would expand with a price drop). MS has all but said the Xbox1 is dead (how many first party games are they still working on for the Xbox1…zero) and they are choosing to focus the industry (and consumers) on the next gen (which, I personally think is extremely short sighted, esp in relationship to the 360 shortages)
If you want to put on your conspiracy hats, I would suggest you figure out what MS gets out of the higher price relative to their relationship with the retailers who would have the most to lose with a system price drop…EB and their ilk selling used/refurbished systems. At the current price levels, they are making big cream on selling these used systems...alot more than they do selling a 360.
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especially since i've hated every razor they've made in the last 8 years or so. ever since that horrid mach 3.
m3mnoch.
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however, it seems like a fine business move. If microsoft has stopped producing the xbox, then they have a bunch of boxes waiting around to be sold. Why not sell them for as much as you can? They have to reason to really try to support the original xbox anymore, so why not let it sit there and slowly bring in a little money to compensate for the huge loss they took with the box. It is fair to assume that at some point, they will sell almost all of those old xboxes, so, if they can get away with a marginally unreasonable pricetag and keep consumner attentions glued to the 360, then..why not?..well, the obvious answer to that question is "to grab a few more xbox faithful and make a few more consumers happy". At the end of the day, dumping off some old xbox units, along with a first party game, and making 10$ more than you would have is just a better deal for microsoft.
Which is why I always buy used..
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Don't be one of the fools.
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it doesnt matter if they are still manufacturing it or not ,the fact is that to say that they dont want you to buy it is ludicrous. Isnt the internet great? Queers like you can get away with telling a man to shut the fuck up without getting thoroughly bitch slapped. LMAO
To m3mnoch:
Whatever; i dont like to get in to arguments over semantics its pointless. My writing and grammar skills are horrible but at least i can think which is more than can be said about the person who posted this article. like i said before im fluent in 4 languages, how many do you know?
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