4 Reasons for Microsoft's Xbox to Go as Big as Possible, ASAP

Microsoft (MSFT) currently offers three Xbox 360 models. The Arcade, with no hard drive. The Premium with a 20GB hard drive. And the Elite with a 120GB hard drive. This is all going to change, to much bigger drives, and there are four reasons why.

Firstly there is the business model of the hard drive manufacturers. They compete mainly not on price, but on disk size instead. They are constantly driving up the capacity of their drives (by 40% a year compound) using technology whilst trying to keep prices constant. So the cheapest drive to buy is the one they are currently making most of. This will usually be cheaper than a smaller capacity drive. Just now top end hard drives for home and office PCs are one terabyte (1,000 GB) with 4 terabytes on the way, so they have left the Xbox 360 way behind. Interestingly, a quick price search shows that 250 GB drives are currently cheaper than 120 GB drives. And as for the 20GB drive that Microsoft use in the Premium, in this industry that is pretty much a fossil. So it isn’t even going to cost money to give us bigger hard drives.

The second reason is the demise of HD DVD. This was the high capacity content delivery system for the Xbox 360. Now that it has gone Microsoft say that they are not going to switch to BluRay, instead they are going to concentrate on downloading content. This is only bringing forward the inevitable. The problem with downloaded content is that you have to store it somewhere, and HD movies take up a lot of disk space. As such, huge hard drives are essential to get the machine to do what the customer wants it to do. The whole Microsoft business model for the Xbox 360 now depends on this.

The third reason is profit. The more storage space someone has, the more content you can sell them. And there is vastly more profit to be made from selling the content of a hard drive than there is from selling the hard drive itself. Microsoft know that the bigger the hard drives, the more profit they will make. This gives them the incentive to go for the biggest hard drives possible.

The fourth reason is competitive advantage. By switching to downloadable content instead of physical media for distribution Microsoft can be seen to be more advanced than Sony (SNE). Also far more customer friendly. You will be able to have the content you want when you want it. The PS3 currently comes in 40GB and 80 GB (NTSC only) models. By offering vastly bigger hard drives Microsoft can be seen to be offering a better product. And because the 360 hard drive is easily removable existing owners can easily upgrade to take advantage of the bigger drives. One advantage of the RROD episode is that Microsoft have learned how to transfer a customer’s content from one drive to another.

So there are compelling reasons for Microsoft to go as big as possible as soon as possible. The 120 GB model was introduced in August 2007 and already, when you look at the reasons above, it is looking small. The 20GB Premium model is difficult to justify. So expect a realignment of the model range and their hard disk sizes this year. Also look for the Xbox 360 to have terabyte range hard drives within the next couple of years.

Comments

[vril:]

Well you can upgrade the PS3 storage capacity yourself, it’s really quite simple and so we can go as big as we want, anytime we want.

2008 Apr 07 07:47 AM

[MisterTwoTurbo:]

Yeah, despite the fact that PS3 owners currently can upgrade to any size with a 2.5" SATA HDD. And Sony designed it themselves to be easily removeable, as well as in the manual it states that it does not Void the warranty to change the HDD. It also even has step by step directions in each PS3 manual how to remove and replace the HDD.

2008 Apr 07 07:56 AM

[JG:]

Yea he definitely didn't do any research before writing this. I run a 500 GB drive on my ps3 that I payed 100 bucks for! Microsoft is losing big time right now in the console wars!

2008 Apr 07 09:03 AM

[kwer:]

I realized the need to illustrate your point, but for the sake of accuracy and credibility, you should point out the different products cited in your arguments - 2.5" vs 3.5" - rather than implying they're the same type. "250GB hard drives are cheaper than 120GB ones." Not if you're talking about 2.5" drives used in the PS3 and XBox.

2008 Apr 07 09:12 AM

[Tom B:]

The whole premise of this article is bogus. Who cares about HD DVD? Listening to movies off your XBox is a lame experience. Have you ever listened to how LOUD the XBox fans are, Bruce? Do some research before you post!

2008 Apr 07 09:49 AM

[mannyortiz09:]

Thomas--the loud xbox fans? are you serious? Not sure how many people watch their HD movies without speakers going. Honestly, my Xbox sits under my TV and I only hear it when the TV is off. Do you watch movies with your speakers on mute?

As far as your HDD size goes; too bad PS3 has no movies or Tv shows of any quality on them. Why would I pay $20+ for a BR disc when i can download them for 500 microsoft points ($6).

2008 Apr 07 11:00 AM

[flex:]

at least when u buy them u can always put it away and use it for later, rather than having it on ur 360 hdd and have no ways or means to back it up. i love my xbox 360, but the only reason is cuz it has good games. nothing else

2008 Apr 07 11:09 AM

[Gaucho420:]

Only the uber nerds care about hard drive size and the coments above prove it!

I agree with him. While the PS3 able to accomodate unlimited hard drive space, the average consumer could care less about that. All they want is good games. So whether its the PS3 or 360, both better figure out real quick how the Wii is kicking both of their asses without a hard drive to speak of!

Lound fans on the 360? That post is 100% false. If it was that loud, I wouldn't own one! Of all the things to criticize about the 360, this is clearly not one of the things wrong with it. If your going to criticize something, at least make it a valid point. If not, please head towards the videogame sites boards and leave this one to the adults.

2008 Apr 07 11:27 AM

[Jagosix:]

Hello Fellow Gamers. Well you can currently upgrade you X360 HDD up to 120GB without paying the Insane amount that MS offers for theirs. The thing is you have to do a little more than just swap. But once it's done you have a 120GB HDD for cheap.

The fan noise thing has been done to death. Give it a rest already and move on. Now as far as movies goes, XBLM give you the option of watching Tv series, Movies, Anime, Preview TV & movies, etc.. I think that option is way cool.
Blu-ray is good but thanks to the internet, I don't have to pay $25-$35 to watch a blu-ray movie. I can also watch blu-ray movies on my X360 via my Home network. Don't need a Blu-Ray drive to watch Spiderman in 1080p. Besides I'm not paying for a movie I already own (on DVD of course), Just to watch it in Blu-Ray. Who's crazy enough to double or even triple spend on the same movie? Not I for one.

M$ will release a bigger HDD for the X360. You don't have to buy it. It's an option. I like options. Don't you?

2008 Apr 08 09:07 AM

[Shadowlight:]

PS3 has the ability to do all that the 360 does with downloadable content, so that really is not an advantage. Also, the PS3 allows users to connect external hard drives via USB (not sure about XB360 as I don't own one).

As for the reason M$ has chosen not to use the BR format is to avoid a conflict of interest. By supporting BR in any way, M$ would be supporting the development and profitably of the PS3. Wither this will decision hurts or helps M$, only time will tell.

2008 Apr 27 10:32 PM