In an interesting reversal of what happened last generation, Microsoft's Xbox One launched at a $100 price premium to Sony's PlayStation 4. Despite Sony building the higher performing console, Microsoft's Xbox One actually had a higher silicon budget (thanks to eSRAM increasing the SoC's total die area). It was ultimately the bundling of Microsoft's Kinect that forced the Xbox One to launch at $499 instead of $399. Committed to making the Xbox One more than just a game console, Microsoft seemingly hoped Kinect would be a non-negotiable part of the Xbox experience. That all changes in early June however.

Microsoft just announced a $399 version of the Xbox One, without Kinect, available starting June 9th. The console hardware appears unchanged, it'll just be sold without Kinect. Microsoft will offer a standalone Kinect option later this fall. Also in June Microsoft will begin offering its Games with Gold Xbox Live program to Xbox One owners as well. Any Xbox One user with a Gold Xbox Live subscription will get access to free games every month (similar to the program already available for Xbox 360 owners, a single subscription will give you access to Games with Gold on both platforms).

Putting the Xbox One at price parity with the PS4 makes a lot of sense, and should help Microsoft in the near term. The real question is whether $100 is enough to move users over to the Xbox One or if the market views the PS4's spec/performance advantage as being more valuable than the Xbox ecosystem. 

The real tragedy in all of this is that both Microsoft and Sony appear to have hedged their bets a little too much with the Xbox One/PS4. I get the feeling that neither company felt the market for ultra high end consoles was all that solid to begin with, and instead aimed lower on the performance ladder than they did last round (relatively speaking). It's a bit of a self fulling prophecy at this point. Going more conservative with performance due to a fear of a market going away is a great way to ensure that the market is open for a higher performing alternative (read: Steambox, PCs) to come in and steal users away. 

In speaking with NVIDIA prior to the Tegra K1 launch their viewpoint is that the clock is ticking for when mobile SoCs can equal the performance of the new consoles. I'm sure the other mobile players are focused on the same thing. We'll likely see Xbox 360-ish performance out of mobile silicon in the next 12 months. Add another few generations (and process nodes) and we'll be a lot closer to Xbox One/PS4 performance. We're already pretty close on the CPU side.

Source: Xbox Wire

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  • andrewaggb - Tuesday, May 13, 2014 - link

    yep kinect support will suffer. I still think it's the right move, they need to move more units and increase their market share to remain relevant. They held out as long they probably could.

    I would have bought kinect separately, I suspect many people will continue to buy it with kinect or buy it later. Having kinect was the main reason I got an xbox one in the first place, it's a unique experience you can't get anywhere else. It's not always the greatest experience, but I support it because my kids like it and I hope that one day stuff like kinect and VR will change the way the world works.
  • JoyTech - Tuesday, May 13, 2014 - link

    Not buying Xbone or PSmore, have a PS3 and assembling a gaming machine this summer.
  • hpglow - Tuesday, May 13, 2014 - link

    Announcing this so far in advance is a poor move on MS behalf. Now all the buyers on the fence will wait for the price drop and Sony has time to formulate a response (possibly a small price drop). I'm not sure price parity will help MS as much as they think. A mid range pc with a budget gpu for $400 just doesn't excite me. I'll just skip this gen unless they suddenly cut the price to $199 or less.
  • mrfunjitsu - Tuesday, May 13, 2014 - link

    Sony won't want to create a price war. It would be a slippery slope.
  • mrfunjitsu - Tuesday, May 13, 2014 - link

    This is all because there is a new head of the Xbox division, Phil Spencer. He's come in and put his stamp on things. Good move to be honest. He's addressed a market who have absolutely no interest in Kinect games, which is significant. But that doesn't mean there isn't still a big market who do want those games. It just so happens that they're not the kind of people who generally post on tech blogs.
  • purerice - Tuesday, May 13, 2014 - link

    mrfunjitsu, every one of your posts is apologetic to the XB1... and you talk about others' rationalization. Let's face it. Microsoft made mistakes with the XB1 from the beginning.
    Ever since features and price of XB1 were announced, existing XB360 fans were outraged.

    Kinect was one of the key points of differentiation for XB1 and the marginal cost for MS is a few bucks per machine. They would have been better off financially and fanancially to do a combination of smaller price drop and game bundle than mere price cutting. Otherwise in terms of accounting, cutting Kinect essentially involves either a writedown of development costs or a lowered IRR of development costs as it will take longer to sell the units with Kinect to cover development.

    I have not purchased a console in over 12 years and don't plan on purchasing one any time soon, so let me say this objectively, Microsoft needs to stop what it's doing and start listening to consumers before angering more potential and existing customers. Nothing about this $100 off Xbox One is a good move. Stop trying to shill for others' mistakes. You just look bad. Unless of course you're getting paid to spew this in which case you're getting paid too much.
  • BadCommand - Tuesday, May 13, 2014 - link

    Should have been called the XBox180. Always connected to the net- no no we didn't mean that. Restrict used games- limited restriction. Must have kinect, no kinect. I wonder what tomorrows flip of the coin will bring.
  • TWolfe - Tuesday, May 13, 2014 - link

    It may be a 180, but I at least like the fact that they are listening to their customers!
  • jimjamjamie - Wednesday, May 14, 2014 - link

    If the Xbox team wasn't so out-of-touch during development of the XBOne, none of these reactionary changes would have been necessary at all.
  • Colin1497 - Tuesday, May 13, 2014 - link

    "The real tragedy in all of this is that both Microsoft and Sony appear to have hedged their bets a little too much with the Xbox One/PS4. I get the feeling that neither company felt the market for ultra high end consoles was all that solid to begin with, and instead aimed lower on the performance ladder than they did last round (relatively speaking)."

    Interesting. My take is that what they have done is set it up so that they can do more incremental upgrades while retaining backwards compatibility for the catalog. By keeping acquisition cost down, and keeping backwards compatibility, they make it easier for people to get on an upgrade treadmill. You could even see games that have a different render target on PS4.1 And XBOne.1, but are otherwise the same game, thinking something like this:

    PS4 games, play on PS4 and forward
    PS4+ games play on PS4 and forward but have features turned on with future consoles, release of these games can precede PS4.1 release, perhaps even some games out today would become PS4+ with an update. Most games at PS4.1 release would actually be PS4+ to hit the biggest target market, but this would be easier than developing PS3 and PS4 versions is at present since the platform is similar.
    PS4.1 games cannot be played on PS4, but everything moving forward.
    PS4.2, etc.

    Make it 3 years between consoles instead of 7. The "plus" game concept keeps the old hardware around as the entry level and all of this is enabled by basing everything on what is essentially PC hardware. PS4.1 could essentially be Puma (or some Puma derivative) and GCN 1.x with more ROP's enabled by a smaller process node. Essentially AMD could push out new silicon this year that would be a nice step up from the PS4/XBone SOC's at the same cost. Push that update out to Christmas 2016 and it is still a $399 box for the hard core guys that maybe can drive 4k TV's, even if the render target for the games isn't 4k and scaling is involved like we're seeing for 1080p on so many XBone games.

    Executed properly with the right developer plan and compatibility, a 3 year cadence could work.

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