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Microsoft (Nasdaq: MSFT) announced packages and pricing for its latest Xbox 360 gaming console this week, delivering an expected price tag of about US$300, but also including a console package with hard drive and other accessories that will sell for another $100.
While the timing of the Xbox 360 release is still aimed for sometime this fall -- "in time for this Christmas holiday, several months ahead of the competition," as Microsoft put it -- the pricing is set for the console's release in the North America, Europe and Japan.
Gaming industry analysts were not surprised at the Xbox 360 pricing, which had been rumored for months, but highlighted Microsoft's strategy to leverage its head start on competitor Sony (NYSE: SNE), which will lag the Xbox release with its next-generation PlayStation 3.
"With the $399 options, there is no competition with the older generation consoles," Parks Associates senior analyst Michael Cai told TechNewsWorld. "They're taking that window and saying we're first, we think we're better -- why not charge a little more?"
Xbox 360 Times Two
As widely speculated, Microsoft made its announcement of the $299 Xbox 360 Core System at the German Games Convention, but the company surprised many with a second package including hard drive, wireless controller, headset and media remote, for $399.
"With both the Xbox 360 and the Xbox 360 Core System, we're offering consumers real choice and real value," said a statement from Peter Moore, vice president of worldwide marketing and publishing for Microsoft's Home Entertainment Division. "We're bringing true next-generation experiences into gamers' living rooms this Christmas holiday."
Similar to Sony's PlayStation 3, Microsoft said its system featured next-generation graphics, audio and play. Unlike Nintendo's gaming-only Revolution, the Xbox 360 and PlayStation 3 will include multimedia capabilities for CDs, DVDs, MP3s, photos and more through integration with mobile devices and digital cameras.
Priced for Players
Parks Associates' Cai said Microsoft was making a wise move with the two-package pricing, allowing it to continue to claim as low or lower pricing than PlayStation 3 while also offering more hardware and recoup the expense of adding a hard drive to the console in the premium package.
"It makes sense, because that first wave of early adopters is less price sensitive," Cai said, adding that the package was indeed a value. "The price really makes sense -- for $399, you get all of it. And at least by charging another $99, they can cover part of the cost [of the hard drive]."
Cai indicated most consumers are likely to purchase the more pricey package, which is what Microsoft is hoping for as well.
Second, Silent, Study
Despite dueling press releases and announcements from the big console makers this year, Cai said there has been less noise from Sony, which may be studying Microsoft's strategy in preparation for a counterattack.
"Sony has been kind of secretive because they are going to come out second," he said. "They do want to take advantage of what Microsoft is doing and try to create some countermeasure."
Still, Cai added the cost of the Xbox 360 console is likely to remain less than the cost of a new PlayStation 3.
Game Winner
Jupiter Media senior analyst Jay Horwitz, who has described the updating of consoles from Microsoft, Nintendo and Sony as "a huge launch era," told TechNewsWorld the companies' release timeline may be less important than the titles produced and popularized for the different systems.
"It's games that make the difference and what you do with the added megahertz that matters," he said.
Horwitz indicated that the companies will ensure they have the hit games they need to try and recoup their losses from console sales, adding it is likely to be "a pretty level playing field."
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