As gamers consider the relative merits of the two next-gen consoles, many bemoan the Xbox One’s price – and with good reason. Priced at $499 and a full $100 over the PS4, the Xbox One puts its customers a game-and-a-half behind its rival’s. The reason isn’t found in the console’s hardware or the Microsoft name. It’s in the peripheral: the Xbox One Kinect.
Unlike the PS Eye, the Kinect ships with the console. According to Rafi Mohammed, author of The Art of Pricing (Crown Business, October 2005), the peripheral and resulting premium has many worrisome implications for Microsoft’s console. In an interview with Bloomberg, he outlined the problems the Xbox One price could cause sales now and in the future.
“[The] goal of consoles is really to use price to sell as many units as possible,” he begins. “You want to get that console in the consumers’ hands and then where you really make the money is off of the games.” Charging such a premium won’t just backfire on Microsoft in the launch window but in the long run, as fewer Xbox One owners buy fewer games, leading to weaker third-party support.
The price may also have an impact on the online multiplayer. Mohammed mentions that Microsoft is potentially “reducing its network, hence the value of going the Xbox route.” He notes that gamers tend to follow their friends in console choices now that online networks make multiplayer more convenient.
Mohammed thinks that Microsoft’s best bet to reduce the Xbox One’s $100 premium is to “make the Kinect accessory- which not everyone uses – make that optional.”