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[conman]

This would look like desperation as much as it would look like hubris on MS's part. I can only hope consumers would be wise enough to see it. Nothing would kill the industry faster than pricing people out of it. $15/mo is insane.

The rumors circulating around MS's strategy for next gen look like the same sort of hubris that hurt Sony this gen. MS's pride is Sony's gain (just as Sony's pride was MS's gain this gen). So it goes.

 

[Ol No Bones]

A good plan that will most likely work.
$500 is about two hundred more than what they should be charging for those specs though the masses probably don't see it like that.

We don't know the specs.

 

[Officerrob]

This would look like desperation as much as it would look like hubris on MS's part. I can only hope consumers would be wise enough to see it. Nothing would kill the industry faster than pricing people out of it. $15/mo is insane.

The rumors circulating around MS's strategy for next gen look like the same sort of hubris that hurt Sony this gen. MS's pride is Sony's gain (just as Sony's pride was MS's gain this gen).

There are many negative rumors surrounding the next gen XBox, but this isn't one of them. It's an option, one many in the United States would prefer.

 

[Chum]

659$.

One should never underestimate the stupidity of people when it comes to monthly payments though.

Why is it stupid? They're effectively taking a loan and paying back the remainder of the cost over 2 years. Perhaps you can afford a $500 console but not everyone can.

 

[Angry Fork]

Will never pay a monthly subscription for a console, and 500$ at launch is too much for me. If Sony does something similar then it looks like I'll have to wait a couple years before I dive into new consoles.

 

[Ushae]

LOL

That gave me a good chuckle too.

GAF what will you do if PS MOVE is bundled with every console too? Will you cry havoc or call it a smart move? Seriously I'm thinking both companies are taking identical approaches. The 'safe' route.

 

[Beer Monkey]

The standalone will be even more rare then the launch $499 PS3. MS will bury the no subsidized model

We don't even know if all retailers are going to carry the subsidized model.

Regardless, I think you are very wrong.

 

[Ol No Bones]

There are many negative rumors surrounding the next gen XBox, but this isn't one of them. It's an option, one many in the United States would prefer.

I don't get why people are bitching. It's just another option. Some people people don't know how to save money so like to pay less up front and pay more in the end. I don't think it's wise but its up to the individual.

 

[Vane_MagicCity]

This would look like desperation as much as it would look like hubris on MS's part. I can only hope consumers would be wise enough to see it. Nothing would kill the industry faster than pricing people out of it. $15/mo is insane.

The rumors circulating around MS's strategy for next gen look like the same sort of hubris that hurt Sony this gen. MS's pride is Sony's gain (just as Sony's pride was MS's gain this gen). So it goes.

An extra $40 over a two year period is insane?

I agree the total price is insane but that's not the issue here. The issue is the difference between the subsidized and unsubsidized models.

 

[dream431ca]

Financing/subsidizing is a core aspect of economics that lowers the cost of entry. It's that simple.

Most people don't have $25,000 in cash to spend on a new car but are perfectly willing to pay the extra $2,600 (4% @ 60 months) in interest OVER the cost of the car to drive one off the lot. A subsidized 720 is a similar concept. Don't have the $500 for the standard version? Then buy the $299 version and "pay the rest off" over 2 years. Yes, it costs more in the long run but consumers are far more willing eat the monthly cost (see: American cellphone market).

A car is very different than a game console. Subsidizing a car makes sense because not all people have $25000 cash. If someone needs to subsidize a $500 item, that person has problems.

 

[gregor7777]

We don't know the specs.

Exactly lol. Your bias is showing, friend. We should be better than that.

Anyhow, I'm guessing this will be wildly sucessful. I'll go as far as saying I'm guessing this will be the best selling sku.

If it's really only $40 more over the long run, I think parents will opt for the cheaper SKU up front.

 

[jcm]

True. If you invest that $200 into the market, or put it in an IRA that is in the market, you would come out ahead on that amount of money in the long run.

No, you probably wouldn't. If you did well and found a stock that appreciates 10% per year, you'd have the following:

Initial investment: $200 ($193 in stock, $7 for the trade)
after year 1, the value of the stock is $212.30
after year 2, the value of the stock is $233.53
Sell the stock for $7 and you have $226.53,
pay 15% cap gains tax on $33.53

You've got $221.50, so you're $18.50 in the hole.

The lesson is don't borrow money at 18% interest to make an investment.

 

[Officerrob]

A good plan that will most likely work.
$500 is about two hundred more than what they should be charging for those specs though the masses probably don't see it like that.

Wait, so with the rumored specs they should only charge $300? You do realize that a PS3 still costs $250 TODAY right?

 

[Beer Monkey]

If someone needs to subsidize a $500 item, that person has problems.

I know tons of people who feel they can't afford $500 for a smartphone.

 

[Iacobellis]

And it was so expensive that it effectively killed any chance of the PS3 selling well for at least two years. $499 is a terrible price if the leaked specs are true. It amazes me that so many people are "ok with it" after the PS3 fiasco.

It's even worse when the 720 is supposedly the weaker of the two new consoles. The PS3 was an absolute powerhouse in 2006.

 

[Chum]

If someone needs to subsidize a $500 item, that person has problems.

That's a very ignorant statement. It's all relative. Just because you can afford to spend $500 dollars on a console doesn't mean that everyone can.

Either way, it's an additional option that provides more choice to the consumer. How is that a bad thing?

 

[leadbelly]

Of course! Of course!

We'll wait and see if this little tidbit of information turns out to be true, but I do love Microsoft's 'bend you over and pound hard' approach to business.

I do like how the price adds up to $360 over 2 years.

This will likely be tremendously successful against a $500 machine (assuming that's PS4's price). No one would do this against a $400 machine.

Yeah. It's a pity Sony told Microsoft their price... Oh wait... they didn't

 

[Sho_Nuff82]

The standalone will be even more rare then the launch $499 PS3. MS will bury the no subsidized model

Why would we assume that they are different skus? Do the current subsidized 360s get a special box?

Edit: the amount of subsidy snobbery here is frighteningly out of touch. Most people don't just buy $700 iPhones and Galaxy S', $199-$299 is a much more realistic price for most consumers up front.

 

[Rolf NB]

Why is it stupid? They're effectively taking a loan and paying back the remainder of the cost over 2 years. Perhaps you can afford a $500 console but not everyone can.

It's a lot of money for a console. Wealth or lack thereof is not stupid. What is stupid is to go by sticker price alone and not look at the full cost.

 

[Officerrob]

A car is very different than a game console. Subsidizing a car makes sense because not all people have $25000 cash. If someone needs to subsidize a $500 item, that person has problems.

Thousands of people subsidize a $500-$600 phone every day

 

[Vane_MagicCity]

A car is very different than a game console. Subsidizing a car makes sense because not all people have $25000 cash. If someone needs to subsidize a $500 item, that person has problems.

I can't afford a $500 item without saving up for it. I guess I have problems.

 

[grimshawish]

Why would we assume that they are different skus? Do the current subsidized 360s get a special box?

Yeah its nothing something you can box.
Is it just me or is the subsidised model a FUCKING NIGHTMARE for launch and retail?

How do you currently go about it for the 360 version? Is there not forms or is it a sign and leave or what?

 

[jcm]

Thousands of people subsidize a $500-$600 phone every day

At least in the US with the iphone, the subsidized phones are a better value than buying the phone outright. They don't reduce the cost of the monthly service by enough to make it worth the upfront cost.

T-Mobile may have changed this. I haven't done the math yet.

 

[Sola Scriptura]

I agree that $500 for the unsubsidized version is way too much, especially given the rumored specs. Microsoft better have some killer launch games if they're expecting people to go for that price point.

 

[demosthenes]

No, you probably wouldn't. If you did well and found a stock that appreciates 10% per year, you'd have the following:

Initial investment: $200 ($193 in stock, $7 for the trade)
after year 1, the value of the stock is $212.30
after year 2, the value of the stock is $233.53
Sell the stock for $7 and you have $226.53,
pay 15% cap gains tax on $33.53

You've got $221.50, so you're $18.50 in the hole.

The lesson is don't borrow money at 18% interest to make an investment.

I was waiting for someone to bring this up and I was waiting for someone to have this answer. Thank you jcm.

 

[conman]

An extra $40 over a two year period is insane?

I agree the total price is insane but that's not the issue here. The issue is the difference between the subsidized and unsubsidized models.

Considering that I already find it unconscionable to charge $40-60/yr for a current XBL sub, yes. Anything MS says about needing that money to support the service is a flat out lie. XBL service is already subsidized by their media, communications, and game publishing partners. Subscriptions are just free money into their coffers. And with cheaper and better alternatives, it's the absolute height of hubris to raise prices even further on those subs.

If the rampant rumors about required connectivity are true, then it just testifies to how profitable those subs are. So much so that they're willing to take a hit in sheer sell-through numbers of hardware if it means getting more subs. Clearly they're making more money on subs than on hardware. It's an ugly business model.

 

[Chum]

It's a lot of money for a console. Wealth or lack thereof is not stupid. What is stupid is to go by sticker price alone and not look at the full cost.

But that's true for any loan or subsidized price. Millions of people do that every day using credit cards - the total cost of purchase exceeds the value of the device.

 

[Ol No Bones]

It's even worse when the 720 is supposedly the weaker of the two new consoles. The PS3 was an absolute powerhouse in 2006.

If the specs are worse I doubt the price will that high. Microsoft would not give that much space in the price war

 

[BRocknRolla]

Why is it stupid? They're effectively taking a loan and paying back the remainder of the cost over 2 years. Perhaps you can afford a $500 console but not everyone can.

There is no economic argument that makes sense here. No one who buys the standalone is somehow a wealthy elitist. If you cannot afford a $500 console, you cannot afford to pay more than that in the long run either. We're talking about luxury items that no one should be "taking a loan" for. Save your money, delay gratification, and pay for it once you've gathered the requisite funds so that you're not paying more in the long run. That's the economically savvy decision.

It isn't an insubstantial sum, but we're also not talking about a car or an education here, and everyone can and should wait if they don't have the money to buy it up front. If money is a real concern for people, they need to get the one that will cost them less in the long run rather than having one more bill to worry about every month.

 

[Vane_MagicCity]

Considering that I already find it unconscionable to charge $40-60/yr for a current XBL sub, yes. Anything MS says about needing that money to support the service is a flat out lie. XBL service is already subsidized by their media, communications, and game publishing partners. Subscriptions are just free money into their coffers. And with cheaper and better alternatives, it's the absolute height of hubris to raise prices even further on those subs.

Again, it's just a comparison between the subsidized and unsubsidized models. It's only a $40 difference.

You don't have to agree with the $500 console price nor the $60 per year Live cost. Nether do I but they are irrelevant to this comparison.

 

[MightyHedgehog]

It's a lot of money for a console. Wealth or lack thereof is not stupid. What is stupid is to go by sticker price alone and not look at the full cost.

While that's Consumer Economics 101, money really isn't always the most important concern. This is how many middle income and lower income families give Xmas and birthday gifts. The benefit is obviously the timing. People pay what something is worth to them.

 

[LQX]

I already have enough bills already, fuck if I'm going to pay an extra $15 a month just because the Next XBox is awesome. Fuck that, I jumping off the ship if that happens.

 

[Colonel Nasty]

The xbox and ps3 still cost 300$. How is 500$ too much.

 

[conman]

Again, it's just a comparison between the subsidized and unsubsidized models. It's only a $40 difference.

You don't have to agree with the $500 console price nor the $60 per year Live cost. Nether do I but they are irrelevant to this comparison.

You're right. I don't have to agree with it. But it is relevant. If this ends up being part of their overall service strategy (and it's sounding more and more like some variant of this will be), I simply choose to "opt out" of their platform altogether. It isn't this single (rumored) thing; it's everything altogether. It's starting to add up to a really ugly picture.

 

[UraMallas]

How is it possible for there to be so many people confused about the repercussions of defaulting on a debt obligation (or worse yet, the consequences when you just decide not to fulfill the obligations)

This board isn't full of mid-20 somethings and up only. There are a lot of young kids and even 15 and 16 year-olds. I would've asked the same question when I was in high school.

 

[Officerrob]

I already have enough bills already, fuck if I'm going to pay an extra $15 a month just because the Next XBox is awesome. Fuck that, I jumping off the ship if that happens.

You do realize they aren't forcing you to buy the subsidized version right? It's an OPTION

 

[Vane_MagicCity]

You're right. I don't have to agree with it. But it is relevant. If this ends up being part of their overall service strategy (and it's sounding more and more like some variant of this will be), I simply choose to "opt out" of their platform altogether.

I already gave up on the Xbox brand but if one accepts the cost of Live and the cost of the console, this isn't a bad financing deal. I think you even get a longer warranty (limited of course) for your $40 finance fee.

The xbox and ps3 still cost 300$. How is 500$ too much.

...and this is why they kept using ever increasing HDD sizes and Kinect to artificially keep the current gen console prices high. Imagine how high $500 would seem if a PS3/360 were $150?

 

[DCX]

The xbox and ps3 still cost 300$. How is 500$ too much.

Its too much when you have to pay for online and get a game or two. Not to mention an extra controller or whatever they decide to shove down our throats. 500 Becomes 700-800 for a console at launch :/ Thats a huge hit for people that don't have alot to begin with.

DCX

 

[Chum]

It isn't an insubstantial sum, but we're also not talking about a car or an education here, and everyone can and should wait if they don't have the money to buy it up front.

My point is that what is considered expensive is relative. Most financial planners would agree that saving money over 5 years to pay for a car in cash is a far better plan than driving one off a lot with loan payments. I did it, so should I consider anyone who takes out a loan to be irresponsible? I could argue that if you need to take out a loan for a car then you should purchase one that is less expensive and doesn't require you to borrow.

Bottom line here is that having more options available to the consumer is not only a good thing but also a smart move by MS.

 

[redmetal86]

Will this use the same XBL cards that the 360 uses? I guess not, but I could be wrong. If it doesn't, the "getting yearly subs for $40 or less" thing might not apply to 720 subs for a while. Theoretically, how long would we have to wait to get cheaper yearly sub cards?

 

[Officerrob]

You're right. I don't have to agree with it. But it is relevant. If this ends up being part of their overall service strategy (and it's sounding more and more like some variant of this will be), I simply choose to "opt out" of their platform altogether. It isn't this single (rumored) thing; it's everything altogether. It's starting to add up to a really ugly picture.

So your problems stem from other decisions MS might be making and not the one being discussed in this thread....there is a lot of that going on in here

 

[Can Crusher]

500$ sounds high to me. I'm wondering if there is more to Durango's hardware than what rumors have pointed to up to now...

It comes down to MS wanting to make a profit on every box sold. From what it looks like, they aren't interested in taking a loss anymore.

Basically they wanna do a Nintendo while still offering something competitive...

 

[Sho_Nuff82]

There is no economic argument that makes sense here. No one who buys the standalone is somehow a wealthy elitist. If you cannot afford a $500 console, you cannot afford to pay more than that in the long run either. We're talking about luxury items that no one should be "taking a loan" for. Save your money, delay gratification, and pay for it once you've gathered the requisite funds so that you're not paying more in the long run. That's the economically savvy decision.

It isn't an insubstantial sum, but we're also not talking about a car or an education here, and everyone can and should wait if they don't have the money to buy it up front. If money is a real concern for people, they need to get the one that will cost them less in the long run rather than having one more bill to worry about every month.

You are ignoring decades of economic precedent here. Consumers do not delay gratification. From phones to cars to clothes to homes, people will buy shit they can't afford for the experience of having it now. Drawing the line in the sand for videogames seems arbitrary and weird.

 

[XenoJim]

The more information that comes out about the next gen consoles the less I become interested in them. It's funny but this current generation I owned a PS3, a 360, and a Wii. I've passed on the Wii U, I will more than likely pass on the PS4, and it looks like the Xbox Infintity/Durango/720/Nextbox/ect will be out of the running as well.

I feel... empty somehow. Like my hobby is being murdered in front of me by mad men for no reason. Guess it's PC only for the next 5 to 7 years.

 

[BruiserBear]

But how much will a beastly powerful PS4 be?

I honestly think Sony could hit $400. That's why the $500 Xbox seems so implausible to me.

 

[The Lamp]

And then you still need to buy live with the unsub model to do anything useful because of all the pay walled shit on XBL anyway. Holy shit this is expensive in the long run. And I already know people that would line up to eat this is crap up.

 

[Speevy]

This is going to be very successful initially, but I think it's a loser starting Spring 2014.

This $15 monthly fee will become a massive turnoff at that point. Now, all that could turn around very quickly.

Asking one game a year buyers (Madden/Call of Duty crowd) to give $180 a year is a bit much.

 

[Miles Quaritch]

I honest think Sony could hit $400. That's why the $500 Xbox seems so implausible to me.

Although it's speculation, didn't the BOM for PS4 come to $450? If that's accurate, it's hard to believe they'll sell the console at a $50 loss, especially after the PS3.

 

[Dartastic]

$300 + $360

I'm amazed that it took ten posts for someone to put this together.

 

[conman]

So your problems stem from other decisions MS might be making and not the one being discussed in this thread....there is a lot of that going on in here

No. It's a bunch of small, similar things that are starting to add up to a big picture. It has everything to do with what's being discussed in this thread. MS is going to do everything they can to get more people to subscribe to XBL. That's their core strategy. That includes their (rumored) online console. Their media partnerships. And their subsidized console.

It's all about the subs.