News reaches us that an industry analyst is predicting that Microsoft will savagely undercut the price of the PlayStation 5 and sell the Xbox Series X at $100 less than their competitor.
“From what I’ve seen, Sony’s gonna have to charge $500 for the PS5 and Microsoft has a big balance sheet,” said the industry insider, “If they wanna cut the price by $100 – just price below [PS5] and subsidise the first 10 million [units] – they will. So, I think that they’re waiting to have Sony blink first and then they’ll reveal the price,” he commented, adding “Very likely $400.”
An astounding prediction, who would be so bold to make that claim?
Oh, it’s Michael Pachter.
That’s “Xbox One to win this generation“, “The UK games retail market is a joke, with retailers pricing below cost to drive traffic“, “PS4 Can Render Games At 240 FPS“, “Activision to charge for online gaming“, “Destiny is a Halo Killer“, and “Apple will release a console“, Michael Pachter.
However, his claim was backed up by former EA and Microsoft executive Peter Moore. “Michael’s right,” he said, “What both companies are going through right now is [asking] ‘how much can we afford to lose in the first 12 to 18 months?’ ‘what is our attach rate of software to hardware?’ ‘What are we willing to do in year one, two and three to hit 10 million [units]?’”
That is true, both companies will be studying their balance sheets and working out the minimum price they can sell the console. However, losing $100 on 10 million consoles is a hit of one billion dollars. Most of the components in the two consoles are comparable, the Xbox Series X has a bigger GPU which will cost more but that is counterbalanced by Sony’s faster SSD and custom audio bobbins so they should be roughly the same price to manufacture.
We should also consider Microsoft’s focus which is not solely on the new console. The Series X does not have any exclusive games from Microsoft in the first year, but will also appear on Xbox One and PC as well. All first party games are also available on Games Pass and soon the Project xCloud streaming service. If they wanted to sell a new console by the bucketload then Project xCloud would not exist, neither would Game Pass on PC.
Meanwhile over at Sony it’s a different picture, PlayStation is by far their biggest earner so in the boardroom they get to call the shots.
How much will the new consoles be? We should find out soon…