Mark Tomlinson

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Tuesday, November 28, 2006

Console price war looms

Console price war looms: "n an interview with the infamous Dean Takahashi at the San Jose Mercury News, Robbie Bach believes the looming console price war will decide the outcome of the battle between the two gaming giants.

Speaking to Takahashi, Bach said, 'You have look at the economics. You have to ask the question, over the life cycle, who has the cost advantage? Who can price most effectively? Who can reach the price points quicker? That has a huge impact on what gets driven.'

He added, 'Because we were out there first, we have a bigger installed base of consoles. We can drive down the manufacturing curve sooner and faster. And because we designed a box that was fundamentally easier to manage on costs, we’re going to have that advantage.'"

OK, so even if the playing field with respect to lead times were even (in other owrds, if MS and Sony had released at the same time) then the one with the highest margin wins. In the beginning, MS was reported to be losing $500 a console, and now Sony is reported at $700... You do the math. Given the years extra time to drop manufacturing costs and to roll out new add-ons and services, Microsoft has a clear home field advantage at the moment. If ANYONE is going to come out on top it is likely to be Nintendo with their innovative approach to simply 'ignoring' the hiTech NextGen market (for the moment) and instead just focusing on games that are 'good enough' visually and fun to play.