Feeds

MS plans subsidised X-Box street price, $500m promo blitz

Dirt cheap hardware, but buy lots of games?

  • alert
  • submit to reddit

High performance access to file storage

Microsoft will subsidise the street price of its X-Box games platform, due out next year, and is planning to spend $500 million in total on making the machine a success. The $500 million will cover subsidies, marketing and support to retailers and software developers, and will make X-Box Microsoft's biggest launch ever - according to Microsoft, that is.

Microsoft's war chests tend to be just the teensiest bit imaginative, including quantities of virtual bucks that move around the columns but never quite leave the bank. In this case, however, necessity suggests that the sum is at least of an accurate order. Microsoft has already bought, co-developed and subsidised its way into the PC games market, and that process will continue with X-Box.

So you could wonder if future purchases and deals with games developers would count as part of the spend, but if they did, it's reasonable enough, and if they didn't the total X-Box promo budget could actually be said to be a lot more. Microsoft will also have to put money into retail deals in order to get the channel fired-up and selling, and natch, it's going to have to promote it via advertising.

All this will add up to a big number which Microsoft almost certainly can't yet quantify, so with some regret we'd probably best just call the $500 million claim a marketing pitch, and stick with the view that the total will be somewhere vaguely in that territory.

But the user subsidy is interesting. This admission seems to have been a Ballmer blurt at the analysts' meeting, and while it's not an unexpected development, it's worth kicking around a tad. Game console makers generally do subsidise the hardware, just like the mobile phone companies and the cable companies, in the expectation they'll make their money out of software. Microsoft has clearly been moving in this direction (e.g. with the Web Companion, which we're sure will be subsidised, like its rival from AOL), and anyway it would have to do it in order to compete with Nintendo, Sega and Sony on hardware prices.

But we've got a better grasp of the cost of what goes into X-Box than we do as far as a Playstation or Dreamcast is concerned. X-Box will have a Pentium III, custom graphics (which MS has already spent a lot on), 64 megs RAM and an 8 gig hard drive. By late 2001 you could be knocking out a pretty cheap PC based on these components, if you thought you could get anybody to buy it.

So if Microsoft went for a serious subsidy, the street price would be 'pretty cheap PC minus X,' where X is the subsidy level. This alone might not be enough to take out Sony, but we have here another blurt. Games division senior VP Robbie Bach reveals that it'll link into WebTV and MSN services, and while this is again logical beyond the point of obvious, it gives Microsoft a potentially huge advantage.

Microsoft can put out a PC-like (minus the crashes, we trust) device at ultra low prices that leverages the company's existing online and software assets, and that stands a chance of becoming the standard home gaming/communication/Internet appliance. It'll be out well in arrears of rivals from the existing console companies, but they have a lot of ground to make up, considering the cards Microsoft already holds. ®

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.