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Microsoft defends Xbox One pricing, says Kinect and entertainment are key differentiators

Wednesday, 4 September 2013 10:37 GMT By Dave Cook

Microsoft Yusef Mehdi has defended the Xbox One’s pricing, and has stressed that the inclusion of Kinect features, along with a blend of entertainment and games gives it more value than its competitors.

GeekWire reports that during this week’s Citi Global Technology Conference, Mehdi explained Microsoft’s stance on the Xbox One’s £429 / $499 price-point.

He began, “Competitively speaking, I feel like we have a much better and more complete value proposition. We do things that aren’t found on other platforms. The Kinect is a huge piece of differentiation, and the fact that we do entertainment and gaming.

“We wanted something to really differentiate that lets you play games as if you’re playing movies and we wanted to break the barrier of being able to voice control your television. So to do that, we added a lot of capability. For $499, we think the value we provide for that is a very good deal. We feel that we’ve done the right balance.

“We’re trying to provide a central device in the living room that for the first time can unify all forms of entertainment in one simple effort. We don’t just want to unify it, but then allow literally with your voice to control your television. We think TV’s will truly become smart TV’s where you can browse and do Skype communication and interactive television. Xbox One is key to opening up that world of next-generation entertainment.”

Mehdi added that Microsoft looks to make a ‘low margin’ on Xbox One consoles at launch, rather than a loss. He continued, “The strategy will continue which is that we’re looking to be break even or low margin at worst on [Xbox One], and then we make money selling additional games, the Xbox LIVE service and other capabilities on top. And as we can cost reduce our box as we’ve done with 360, we’ll do that to continue to price reduce and get even more competitive with our offering.”

Do you feel that the blend of Kinect, entertainment apps and gaming in one central device is worth a higher price threshold? Let us know below.

Via OXM and Videogamer.

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42 Comments

  1. KAP

    Simple maths.
    £80 more then your competitor and your gonna have slight problems.
    You can’t rely on Kinect as a system seller.

    #1 2 years ago
  2. Aullah

    They dont understand that gamers DONT WANT IT. So its NOT A GOOD VALUE. Also… the voice is only working in 5 countries.

    #2 2 years ago
  3. super3001

    cheap off the shelf components with no innovation vs custom silicon and a true next gen os ui and hardware.

    better machine costs bit more will last longer an perform better

    #3 2 years ago
  4. Ceois

    All i really wanted was a gaming console…..oh well

    #4 2 years ago
  5. Metroid455

    aaaah the PS4 does entertainment and gaming aswell , and Kinect is NOT WANTED by gamers PERIOD.

    #5 2 years ago
  6. Fin

    “cheap off the shelf components with no innovation
    custom silicon and a true next gen os ui and hardware.”

    {{citation needed}}

    Though I honestly couldn’t tell which you were talking about until you said the better machine costs more.

    #6 2 years ago
  7. Elvis71

    @3

    what the heck are you talking about ? Get your facts straight … cheap off the shelf components .. LOL

    #7 2 years ago
  8. JB

    I`m guessing Yusef Mehdi doesn`t play games at all.

    “that lets you play games as if you’re playing movies and we wanted to break the barrier of being able to voice control your television.”

    “interactive television”

    >_<

    #8 2 years ago
  9. Elvis71

    didnt we have that in the early nineties ? o_O

    #9 2 years ago
  10. MFBB

    Kinect sucks and is useless.

    Just like the PS Camera.

    No interest in being video/audio recorded, waving my hands around, shouting commands at the screen…

    I would only get one of those if I had kids.

    For them it sure it is fun to play.

    Occulust Rift and Sonys soon to come virtual reality glasses are way more interesting for gaming.

    They gonne reach 720p soon with Occulust Rift and sometime later 1080p.

    Or may be Sony already reached that with there glasses, they want to announce it later this year.

    I hope Microsoft gets something going aswell, may be partner up with the Occolust Rift guys and have the Xbone support it.

    #10 2 years ago
  11. nostramo

    Wonder what percentage of gamers who buy
    a xbox one will just leave the kinnect in the box
    it all came in still wrapped in the selophane?

    #11 2 years ago
  12. mark_t50

    Yeah, adding a camera (I have no intention of using) to the box and price, plus ‘TV services’ that probably won’t even work in the UK, and even when they do, who cares when you’ve got Netflix and ‘other’ means to watch TV.

    Maybe it’s just me but I’m not seeing the ‘value proposition’ right now, in fact it is the opposite, all I’m seeing is a box that is less powerful than the competition if the internet is to be believed, and is forcing crap down my throat that I have no interest in.

    #12 2 years ago
  13. JB

    @9 Lol :D

    It sounds exactly like the future visions of the late 80`s or early 90`s in low budget sci-fi Hollywood movies of the time.

    #13 2 years ago
  14. SplatteredHouse

    Their concept of value proposition is like offering a compass to a blind man, on a mountain ridge, within a pea soup.

    #14 2 years ago
  15. Ekona

    I want the updated Kinect, and I want a console that does more than just play games. It’s why my PS3 is still plugged in, as it plays BDs where my 360 does not.

    The vocal internet may not care for Kinect and the extra entertainment bits, but there’s gotta be enough people out there that do if they’re selling out of pre-orders (and assuming they have more than 15 consoles for the whole of the UK, of course ;) ).

    I can’t wait to get my hands on one. Each to their own and all that.

    #15 2 years ago
  16. Lengendaryboss

    I’m not repeating myself, nuff said.

    #16 2 years ago
  17. SplatteredHouse

    http://www.neogaf.com/forum/showthread.php?t=669145 How about that pricing, then? Ex-HMV man (#44) says it himself right there – avoid retail! They price gouge.

    #17 2 years ago
  18. pcbros

    The PS3 released for $600. “Nobody wants a Blu-Ray player! We just want a game console”. I bet most of you whining right now own a PS3 :P

    Stop complaining…

    #18 2 years ago
  19. SuperGamerDude

    Sony camera does practically everything what the Kinnect does so it’s not a “key differentiators” as MS call it.

    #19 2 years ago
  20. super3001

    19

    nope. not even close

    #20 2 years ago
  21. Joe Musashi

    I’m willing to accept the logic that a manufacturer has to be bold enough to push the envelope and encourage adoption of something that many believed they wouldn’t need. Look at what Apple did when they introduced the iPad, for example.

    So it’s possible that Microsoft’s commitment to Kinect and how it integrates with Xbox One’s services will be a revelation.

    However, the functionality needs to be meaningful to the masses. Putting it in every box is not enough. And the deployment of Kinect’s functionality and services is being staggered as well. These events run contrary to Microsoft’s statements about how integral Kinect is to their product.

    JM

    #21 2 years ago
  22. smithy2483

    super3001

    Apart from the Kinect which i agree which looks far superior than PSeye, what other part of the hardware on Xbone is better than PS4?

    I can name 1 = rumble in triggers sounds cool. Other than that, according to specs sheet, PS4 wins it.

    UI i beleive is completely personal opinion… i prefered the original 360 dashboard to the current Live Tiles and i like the simplicity of the PS3 at the moment. Havent seen enough of the new ones to comment, but it doesnt matter anyways, i use it to launch games pertty much solely

    #22 2 years ago
  23. Doppleganger

    @18
    Very true but that is the reason for poor PS3 sales.
    Ill be buying a xbox one as I do play my consoles in a home theatre so I can make really good use of all its features, plus theres just way more games at launch that attract me compared to just one on Ps4.. But Xbox one will suffer just like the ps3 did as they are telling people what they want and they did a piss poor job explaining it to the majority of extremely dumb consumers.
    Sony learned from their mistakes and they are doing a great job correcting it.
    Microsoft really should have made 2 versions of the console. Hell even 3 as I would rather have a non optical drive version as it should have been!!!! Thats one feature they shouldn’t have listened to the people.

    #23 2 years ago
  24. Professor Zoom

    #2 Fortunately Microsoft offers you systems for you who don’t want Kinect and they’re called PC and Xbox 360, stick with those if you don’t like it, you don’t necceasirly need to get the console at launch if you’re absolutely unsastisfied about the price.

    #24 2 years ago
  25. pcbros

    @23 – I think Sony will definitely have a upper hand initially, especially with the misinformed community who thinks the XB1 still has DRM restrictions, always online requirement and think the Kinect 2 = Kinect 1.

    But I think if Microsoft can advertise correctly, they will attract gamers, football fanatics and casual gamers.

    “Sony learned from their mistakes and they are doing a great job correcting it.”

    I partially agree. But by not including the PS Camera + Move, they killed any chance of it really catching on. Less developers will take the risk and include 100% motion controls. What you will see are gamepad based games with tacked on motion controls. And with Sony hyping up indie development so much, it’s sad that they made it more difficult for indie developers to create games using motion controls.

    Indie developers are among the most creative in the industry. They need every tool they can get and we as gamers should want them to get these tools. On this end, I think Microsoft scored big. Indie developers can now make games using Kinect 2 without any risk. Are minds might not be able to see the potential now (which is why most of us are not in game development) but I promise that the minds of indie developers will.

    Sony is basically telling people, “I know what you want for the next-generation. Better graphics”. Yet, they promote indie games that in all honesty, usually don’t compare in visuals to AAA titles. I don’t fully agree with this position.

    I give Microsoft credit for having the balls to stick with the Kinect 2. In my opinion, Sony seems too eager to win the popularity contest.

    #25 2 years ago
  26. viralshag

    @25, Agree with almost all of that.

    The thing they will have learned the most is that nothing will be decided in the first year or so of sales. Obviously they’re going to want to see a bigger up-take than what the WiiU has so far but if this gen has taught them anything it’s a long run to the finish line.

    Sony only just caught up to 360 sales in the last year or two and both consoles can be considered to have done extremely well. I think by the two or three year mark both consoles will be doing very well.

    #26 2 years ago
  27. Phoenixblight

    There is a problem with MS and Kinect being a “differentiator”

    1) very few developers are actually utilizing the device(Kinect Sports, Project Spark) the rest of the developers are just tacking on menu navigation with voice commands, hardly worth the extra 100.

    2) Multiplatform devs won’t bother with kinect pass voice commands. It takes too much work and they won’t focus on one system more than the other.

    Only way MS can push this device is if they utilize Kinect with the next Halo but I doubt they will.

    #27 2 years ago
  28. pcbros

    @26 – I agree 100%. Initial sales are just bragging rights. More likely than not, both Sony and Microsoft will have good install bases by the second or third year. With one distinction, Microsoft will have placed a Kinect 2 in all those homes. That’s a nice advantage to have in my opinion.

    @27 – But I think it’s too soon to see the Kinect’s potential. Launch games tend to be rushed or ports of last generation games. Never judge a console by it’s launch line-up.

    Also, don’t forget the Kinect and Move were tacked on (in hopes of stealing some of the Wii’s thunder) during the second half of the console’s life. Not a lot of people bought it, therefore not a lot of developers created much with it. Also, the difference between Kinect 2 vs Kinect 1 appear to be very substantial.

    Unless the PS Camera + Move were developed poorly or offer nothing exciting, Sony is going to regret not including it down the road.

    #28 2 years ago
  29. Phoenixblight

    @28

    ” But I think it’s too soon to see the Kinect’s potential. Launch games tend to be rushed or ports of last generation games. Never judge a console by it’s launch line-up.”

    THen there is no reason to justify the price at the moment. MS will be biting the loss until they can provide reasons why there is a kinect. MS is currently taking the hit in just preorders alone. PS4 is at the top where the Xbox One is near the 50 mark on Amazon. MS is doing exactly what Nintendo is doing with the Wii U giving no reason for their device but hey if you want to pay 500 for the potential of what developers could do with it that is your business. I however see no reason to buy the Xbox One especially with the cost and the lack of software to provide reason for the extra 100$.

    Also not all launch games are rushed. Majority of the games that PS4 has showcased were in development for 2+ years which is standard for development. I hardly see it as rushed.

    #29 2 years ago
  30. pcbros

    @29 – I agree. They have to prove why people need a Kinect. But don’t forget the PS3 released months after the Xbox 360. It was $600 and included the Blu-Ray player. Yet, Sony somehow caught up.

    Microsoft is not doing the same thing as Nintendo. Microsoft has gathered lots of 3rd-party support. Nintendo’s problem is that they cater to a more niche market, while MS and Sony cater to the masses.

    Some might even say that Microsoft has a better launch line-up. I think they are a little more spread out in terms of genres. Project Spark for example is impressive. If I was a parent, I’d buy this for my kids. Also Forza fans will not go to DriveClub to save $100. If Sony had released Gran Turismo for the PS4 at launch, things could be different. If COD has a smoother online experience because of dedicated servers on the XB1, COD fans will pay the extra money.

    So while saving some money is always good, it’s not always the most important thing.

    Don’t forget Microsoft might announce a bundled game, cutting that $100 difference to essentially $40.

    In my opinion, it all comes down to marketing. Whoever markets their console better, will get the upper hand.

    #30 2 years ago
  31. wildBoar

    @29 Microsoft included Kinect for faux smart Tv functionality. Yelling at your TV, that’s what was its intended use and function. MS haven’t been able to launch a succesfull device in years so they focused on Xbox as their gateway to launch services etc. The Wii U gamepad was at least aimed at gamers, (though a poorly developed concept) Kinect is aimed at people who enjoy tv and dumb casual party games.
    No wonder it’s a hard sell to the hardcore crowd, they clearly forgot about them while developing the damn thing. A price cut will propably get it going but I much doubt Kinects capability as a gaming device. As a media device it might prove it’s worth.

    #31 2 years ago
  32. pcbros

    @31 – The Kinect 2 also has the capability of creating in game characters based on your appearance. I can just picture playing a FPS where my friends actually look like my friends.

    Give developers (especially indies) the chance to show off the Kinect. If by the end of 2014, Kinect 2 has not be proven worthy… then expect a Kinect-less bundle ;)

    For this reason, I do not plan to by a next-gen console this year. Neither will be proven in my book.

    #32 2 years ago
  33. pcbros

    Just a little side note…

    Xbox 360 owners have been paying every year ~$50 for Xbox Live, while the PS3 offered FREE online play. I doubt the one time $100 price difference will drive them away (especially now that PS Plus is mandatory for online play).

    #33 2 years ago
  34. Professor Zoom

    #33 Well I don’t know much about PS Plus, but I heard that the free games they get there are only rentable? While us on 360 gets them free? I think retable is a waste since I live near a library loaded with video games and I heard that PS3 has more disconnections and bad live chat, so as we talk right now, I think Gold is much better than PS Plus.

    #34 2 years ago
  35. Professor Zoom

    #31 Just because you don’t like it doesn’t mean it’s dumb, stick with PC or 360, if you don’t like it.

    #35 2 years ago
  36. pcbros

    @34 – It’s tied to your PS Plus account. So if you don’t renew your PS Plus subscription, you can’t play your games. But if you renew it, you get access to all those games again.

    The problem with Microsoft’s plan is that the games are too old. Halo 3? Come on Microsoft, we can do a little better than that.

    So if you plan to renew your PS Plus account (which is a given if you plan to game online), then at the moment, PS Plus offers a better value game wise. Not sure about it’s online features.

    #36 2 years ago
  37. Professor Zoom

    #36 What about Dead Rising 2? Games with gold have only been on for a couple of months, so far I think it has been pretty good and most of the games like Crackdown, I hadn’t played yet, and there was a huge ultimate summer sale on Microsoft Store and Xbox Live, where I got Crysis 3, Crysis 1, Bulletstorm, Beyond Good and Evil HD, Far Cry 3 Perfect Dark, Perfect Dark Zero, Prey, Max Payne 3 and The Orange Box for very low prices, there was also a big bunch of more very newly released games for very low prices. I think it’s only a matter of time before they will offer newer games, but I’m paying only 29£ for a whole year, so I think it’s a pretty good price. If you count a whole year it will get up to 24 games, that you own permanently, and won’t stop working if you haven’t renewed your membership.

    #37 2 years ago
  38. pcbros

    @37 – True. I’m sure they will both equal out.

    Too bad new PS3 owners who purchase PS Plus don’t have access to previous free games. That would be nice :)

    Hopefully PS Plus and Gold games will make their way to PS4/XB1…

    #38 2 years ago
  39. monkeygourmet

    The only problem MS have is that they don’t have a Kinect ‘Killer app’ out of the gate…

    For some reason, I really don’t think they see this as a problem or Sony as a threat this coming generation.

    Now, that may be a stupid way to view business, but as we’ve seen before, the views of gamers on websites such as this and the mass market rarely tend to agree.

    Im sure MS is prepping itself for TV services, TV shows and more ‘media domination’… Win the battle through saturation rather than pure gaming focus.

    Sony’s ‘Indie’ stance is noble, but I swear it’s born out of necessity rather than ‘support for the gamer’… It’s all a game, and I don’t forget Sony’s agressive bid for the living room space using propriety media one bit….

    I expect Sony to gain the intial lead, only to be swamped by MS’s infinate monies somewhere down the line.

    Sony seem desperate to be the good guys, even potentially scalping their own vision of the PS4 to acieve a cheaper and more ‘gamer-centric’ approach.

    Wether that works or wether MS has just pulled a ‘PS3′ remains to be seen. One things for sure though, MS has the money to steer things in any direction they want.

    Also, this whole situation shows how annoying true Sony fanboys are… Your company has done a complete U-Turn on the console you have been defending all these years and you are comending them for that?!

    It’s just the same as MS fans who tried to defend the Xbone before the changes, except, you guys held onto your crazy views a hell of a lot longer…

    Even Sony knew they fucked up with the PS3 lol!

    #39 2 years ago
  40. fearmonkey

    I disliked the first Kinect and never bought one. I have several friends that own them and had a chance to play with them extensively, not my cup of tea.

    So, a new improved Kinect that i’m sure does some amazing things still doesnt really interest me that much. I really don’t care about scanning myself in a game, scanning objects into games, having my biometrics watched, voice control, etc.

    Sony’s answer to Kinect 2 is not near as elaborate, but I don’t really care as it’s an option rather than a must have. I am not forced to buy it so that makes me happy.

    I’ll eventually get an Xbone just so I can play MS’s games, but I’ll wait till the price comes down, or if I suddenly have much more spending money than usual. The best thing about the console is the new controller, which I am eager to test and use on PC.

    MS did a ton of 180′s, I wished that they would have done that with Kinect as well. It will be interesting to see if this $100 extra cost affects them long term. In the short term it wont, Xbox fans will buy it simply because it’s Xbox.

    #40 2 years ago
  41. Professor Zoom

    #39 Well, I think that Kinect Sports Rivals is gonna be that game, the same way Nintendo sold 100 million Wii systems because the casual basically wanted only to play Wii Sports or Wii fit, that’s why third party software was weak for the Wii both in terms of amount and sales in the very first place. Has Sony even said a word about their camera? The software lineup for it looks weak.

    #41 2 years ago
  42. Tormenter

    The only reason MS’s new console effort was in the least attractive was for the surround vision/projector demo they did, it made everyone wet but now MS say it it was all a lie and that fuctionality isn’t feasable for a home console, so the console is now relegated to ‘what’s the point, aren’t we sick of all the bullshit hype yet?’

    As for the price being ‘worth it’.. maybe in the US, but for the rest of the world MS want people to pay for a box half full of hardware that they’ll never be able to use?.. Effectively subsidising the Americans to get a better service and cheaper hardware, because if they, american buyers, had to fund all that hardware just for themselves the console would cost double.

    It’s all just another conjob… MS are utterly obsolete now. They should just give up. Anyone who falls for their BS this time deserves to be robbed…. So yeah, run along all you idiots and buy it… sorry.. run along and whinge and whine to your parents to buy it. If any of you had a brain in your head you would ignore it for all the shit MS has tried to pull.

    LOL.. ‘if you had a brain in your head’….sorry, I forgot who’d be reading this, of course you don’t.

    #42 2 years ago

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