Even though Microsoft Corp. has reversed its Xbox One-related decisions regarding connectivity requirements and DRM, it did not lower the launch price of the console and will sell at a $100 price-premium when compared to Sony PlayStation 4. Some analysts believe that due to lower price of the PS4 it will outsell the arch-rival, other assume there will be a tie. Still, it is believed that in case Microsoft faces issues with sales, it can just lower the price of its console.
"Microsoft intends to offer a more robust hardware bundle than Sony will offer, and Microsoft is convinced that consumers will ultimately appreciate the value proposition presented by Kinect," wrote Michael Pachter, an analyst with Wedbush Morgan, in a research note, reports CVG web-site.
Xbox One Price-Cut Possible in 2014
Both Microsoft’s third-generation Xbox as well as Sony’s PlayStation 4 are based on semi-custom AMD Fusion system-on-chips with eight Jaguar general-purpose x86 cores, AMD Radeon HD GCN architecture-derived graphics processors and other special-purpose hardware units. Both consoles will have hard disk drives as well as Blu-ray disc drives. Microsoft Xbox One will come with bundled Kinect 2 motion sensor and will cost $499 at launch. By contrast, Sony will not include PlayStation Camera with the PS4 (sold separately at $59), but will sell the console for $399.
So far, Microsoft has been losing PR war against Sony, which has done fabulous job communicating advantages of the PlayStation 4 and not attracting attention to the drawbacks of the system (lack of high-end motion sensor, absence of robust web-based entertainment services, etc.). However, the software company has plenty of time to discuss the benefits of Xbox One. Furthermore, for next year Microsoft might be preparing a price-cut, which could be a particularly good sales driver for an established gaming platform.
“Microsoft has not done a particularly good job of communicating the value proposition to consumers, but today's announcement will remove an impediment to the company's ability to get its message across. We are confident that with six months of focused messaging, Microsoft can fully level the playing field with Sony, and we expect the Xbox One to sell as many units as the PS4. If we are wrong, we think that Microsoft is prepared to lower price next year,” added Mr. Pachter.
Price Difference and Exclusive Titles Will Decide the Outcome of Clash
Other analysts are not as optimistic as Michael Pachter. Edward Woo, senior research analyst at Ascendiant Capital Markets, anticipates Xbox One and PlayStation 4 to each sell two million units in 2013, with PS4 pulling ahead of its rival significantly next year. The analyst predicts unit sales of 10 million for the Sony console in 2014, and five million for Xbox One.
“I still think Sony, with the $100 price advantage and goodwill from the Microsoft mess, still has the upper hand. […] I think the consoles are very similar so the $100 price difference will now be very important. Microsoft will have to explain why the $100 is worth the price. I don’t know if they will be successful, though they do seem to have a slight edge with more exclusive software right now,” said Mr. Woo in a conversation with Edge-Online.
Microsoft will have even more troubles explaining higher price-tag in Europe, where the difference will not be $100, but €100, or $132. While it is obvious that advanced Kinect 2 has a lot of value, its value has to be communicated to the end-user long before actual sales start. Given the fact that Microsoft has not been as active in Europe as it is in the U.S., it will have to change its policy significantly to sell a lot of Xbox One consoles beyond core gamers in the EU.
“We believe price will be the biggest differentiating feature and have slightly adjusted down our Xbox One sales expectation for continental Europe at launch, based on the €100 gap in pricing,” said Piers Harding-Rolls, senior principal analyst and head of games at IHS Screen Digest.