The Xbox Series X may be more powerful than the PS5, but it also may be cheaper than the next-gen PlayStation console, at least if rumors and speculation about the PS5 being $500 are true. According to prominent industry analyst Michael Pachter, Microsoft may be preparing to take a considerable loss on the Xbox Series X at launch in order to sell it at a $400 price point, which would allow it to undercut the PS5, much like the PS4 did the Xbox One back in 2013.

According to Pachter, Microsoft is in a position, with its huge balance sheet, to take a big loss on the console at first. The thinking behind this strategy would be that Microsoft would more than make up for this loss by selling software to these consumers over the course of the generation. It's a strategy console makers have used in the past, but it's obviously not a preferable strategy. It's risky, especially when you're eating roughly $100 on every console sold. Say you sell 10 million consoles at this rate, that's a loss of $1 billion.

That said, Pachter argues that Microsoft could easily afford such a loss:

"Microsoft's being pretty smart about waiting Sony out here," said Pachter while speaking to Geoff Keighley on Periscope. "From what I've seen, Sony's going to have to charge $500 for their PS5, and Microsoft has a big balance sheet - if they want to cut the price by $100, just price below and subsidize the first ten million, they will.

The industry analyst continues, revealing that he believes Microsoft will wait until Sony reveals the price point of the PS5, and then adjust the price of the Xbox Series X based on what Sony reveals.

"So, I think that they're waiting to have Sony blink first, and then they'll reveal the price and the launch date. It's going to be holiday 2020, so very likely sometime in November, very likely $400. And fans are going to get a lot from their $400."

Of course, this is nothing more than speculation, which means nothing here is worthy of taking to the bank or the bookies. Will the Xbox Series X cost $400? It's possible, but I doubt it. The console probably costs -- roughly -- $500 to manufacture and bring to market. And I can't see Microsoft eating this much cost upfront just to push units. It may not be the market leader, but it's not in such a bad position that it needs to act so desperately and aggressively with the pricing of its new console.



Posted: May 11, 2020 7:09 pm
Related Forum: Xbox Forum

Source: https://comicbook.com/gaming/news/xbox-series-x-price-cost-speculation/