The Gaming Wars: Microsoft Trying to Make Life Difficult for Sony (MSFT, SNE)

News4Gamers.com breaks good news for video gamers that could have a significant impact on the overall consumer electronics industry:

It looks like Microsoft (MSFT) is planning to crash Sony’s (SNE) PS3 launch party by dropping the price of the Xbox 360 this coming Christmas. A source close to Microsoft says consumers can expect a price drop of almost $100.

The source also revealed according to Britxbox.co.uk that the Xbox 360 hardware team are now busy redesigning the chips supplied by ATI and IBM to cut costs and allow a price drop to coincide with the release of Sony’s Playstation 3.

If this holds true you will be able to buy an Xbox 360 for half the price of the PS3 this Xmas. This will certainly put Microsoft in a very lucrative position when the next-gen console war starts for real later this year.

As we wrote recently, one major reason why the PS3 will be so expensive at launch ($500-$600) is that it will include a high-definition DVD player using Sony’s Blu-Ray technology. Since the first Blu-Ray player is expected to cost $1,000 when launched, the combination game console/DVD player could be a hot commodity. Or at least Sony hopes.

The Sony Blu-Ray DVD

Sony is working hard to put its Blu-Ray technology everywhere in order to avoid repeating its Betamax blunder. Computers, gaming consoles, DVD players, televisions - even the movies in Sony’s Columbia Pictures and MGM libraries - all will be sporting Blu-Ray. If they gain enough traction they could own the standard in high-definition video and squash rival HD-DVD.

Yet consumer surveys clearly show that buyers are not interested in a format war. They want their high-def player to play any high-def movie. And as a result, Sony’s plan could backfire. With both XBox and Nintendo’s surprisingly buzzworthy Wii both set to sell for half the price of PS3, Sony risks losing the DVD format war and its dominant market share in gaming all in one swoop.

MSFT-SNE 1-yr comparison chart:

Comments

[Tom B:]

If I were a MSFT shareholder, I'd be pretty mad that haven't axed their money-losing game division.

2006 Jun 21 08:14 AM

[William Trent_:]

The game business is really just a drop in the bucket for them. They have, as one wag recently said, spent $5 billion over the last five years <i>not</i> releasing Vista. You can see my June 15th post in the MSFT category for my opinion on their overall R&amp;D spend.'

MSFT views gaming consoles as their entry into the living room. What they don't know is how to make consumer products that are intuitive for people who did not grow up playing with computers or gaming consoles. I doubt they can learn it, so I would agree with your sentiment that they would be better off without the segment.

2006 Jun 21 08:38 AM

[Tom B:]

They also like gaming as a means to push DirectX over OpenGL.

Which won't work, since the latter has such broad support among developers.

2006 Jun 21 10:52 AM

[Faisal Laljee:]

Sony has had this "attitude problem" for a while now. They believe in proprietary technology and to this date, no company has been successful adopting such nonsensical philosophy. If the iPod didn't play regular mp3's, they would not have been successful. Sony needs to be that way too. With their memory sticks as opposed to the SD cards in the flash memory area, and their BetaMax as opposed to VHS and now this BlueRay, its no wonder the company has not fared well these last few years.

2006 Jun 21 12:03 PM