Microsoft's Xbox One Is Too Expensive

Back in June, Sony (NYSE: SNE  ) launched a stealth attack on Microsoft (NASDAQ: MSFT  ) . This week it's been Nintendo (NASDAQOTH: NTDOY  ) attacking from the other side.

When Microsoft hits the market with the Xbox One in November, its $499 price point is going to stand out against Sony's PS4 at $399 and a deluxe Wii U bundle at $299. Fans of the Xbox console franchise will argue that it's worthy of a premium. They'll say the Wii U is for kids. They'll point out that the PS4 was able to undercut Microsoft's machine by leaving out the motion-sensing camera that's included with the Xbox One. That may all be true, but history hasn't been kind to the higher-priced console. That was the PS3's role last round, and Sony's market leadership position in this country suffered as a result of initially pricing its machine at least $100 higher than the competition.

Microsoft probably thought it had this generation in the bag when it announced its pricing and release strategy in kicking off the annual E3 gaming powwow back in June. It couldn't have imagined that Sony would turn heads a day later by unveiling a lower price for its PS4 and taking shots at the Xbox One's restrictive ways.

Everything seemed to be settling down for Mr. Softy, but then Nintendo's desperation kicked in.

Nintendo's move earlier this week -- slashing the price of its deluxe Wii U console by $50 and making it an even better deal by bundling it with a new Zelda game for the Wii U -- wasn't a surprise. The Japanese gaming pioneer cleared only 160,000 systems worldwide in its latest quarter. A price cut was a given, and it had to act before the November PS4 and Xbox One rollouts to hammer home its value proposition.

Nintendo didn't stop there. It also unveiled the 2DS handheld gaming system at $129. Microsoft doesn't have a portable gaming system on the market, but it will be one more item for adult gamers and parents of young gamers to consider as they size up their holiday shopping priorities this year.

And it could still get worse for Microsoft and that iPad-esque price tag. Reports this summer indicate that Amazon.com (NASDAQ: AMZN  ) is going to dive into the console gaming market later this year. The Android-fueled set-top box will naturally stream TV and surf the Web, but it will also lend itself to the Android games that are rapidly evolving from the Angry Birds and Temple Run that you were playing a couple of years ago.

As the Wii U, Xbox One, and PS4 become more than just gaming machines, it's not a shock to see other media companies moving into gaming platforms. Furthermore, anyone who's seen Amazon's aggressive pricing strategy on the Kindle e-reader and Kindle Fire tablet knows that if the company does put out a gaming system in time for this holiday shopping season, it's going to be cheap.

Are you still comfortable at $499, Microsoft? You may want to rethink your pricing. Isn't that what the Surface RT tried to sell for last November?

We saw how well that played out.

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Read/Post Comments (33) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 31, 2013, at 6:14 PM, JaredM80 wrote:

    Well the Playstation 3 was 100 dollars more at launch and people still bought it. I just hope those who criticized the PS3's launch price don't shrug this off like it's nothing.

  • Report this Comment On August 31, 2013, at 6:22 PM, Shillingdetector wrote:

    But Chow is an expert on gaming and gaming culture and he told us that Microsoft won E3 and the Xbox One is superior because Microsoft makes more money than Sony and Nintendo................

  • Report this Comment On August 31, 2013, at 6:30 PM, Junior2592 wrote:

    i believe that the xbox obviously has more to offer over time than the playstation 4. it might not be the winner now, but it will end up on top eventually. and for 500 bucks i think its worth the thing ill get for it. the playstation started off great but in the end the xbox one will be best for bot gamers, movie freaks and people who would love to watch TV without needing to press the channel buttons on the remote. so say what you want but like the xbox 360, things starts rough at first but eventually, people will prefer it more. just you wait and see.

  • Report this Comment On August 31, 2013, at 6:33 PM, Zatannux wrote:

    @ Shillingdetector: ....And that is why no one respects his opinion and ripped him "a new one" when that article was published.

  • Report this Comment On August 31, 2013, at 6:39 PM, Desktopguy wrote:

    Sorry Fool But Amazon is not going to out sale the X-Junk one for one simple reason and that is because the games that Android thing has is way under par and are more of a time passer than anything else.they are not in the same league as the other consoles.

  • Report this Comment On August 31, 2013, at 6:59 PM, chrismireya wrote:

    This is RIDICULOUS. The PS3 was initially sold at a higher price. While it did affect the sales, I personally think that the Xbox One is WORTH the extra $100 on the basis of a HD camera, free Skype video/voice calls, the built in HD microphone (11 channel), hands-free controls (for sport and exercise games), an included headset and the immense number of apps and original content.

    If I want a PS4 (which I will purchase), I still need to buy a camera and/or for $60. I only get a handful of apps and no original content. Even with the camera, I don't get the interaction.

  • Report this Comment On August 31, 2013, at 7:33 PM, Badeaston wrote:

    The 360 came out lower, but parents (mostly) spent over $1000 to have their children play Call Of Duty online on the Xbox... With the same damn game quality (don't argue this, I've experienced both and its no different).

  • Report this Comment On August 31, 2013, at 7:41 PM, Badeaston wrote:

    Plus... Really people, who the hell really feels like dancing in front of their game console? Both of these machines have the same specs, but the argument of the camera? Really??? The camera isn't going to make either machine better when playing your cross-platform FPS you'll be on 98% of the time (just admit it, you know you will). Both systems will be awesome, but when the fanboys really start showing up, please don't bring the camera up, its not anything to brag about. Just like a sunroof on a car, which the average person uses 6 times in total ownership.. Thats a factical statistic.

  • Report this Comment On August 31, 2013, at 9:33 PM, hnbhatia wrote:

    NO SHEEET...... everything MS is way over priced.

  • Report this Comment On August 31, 2013, at 9:46 PM, deputyspade wrote:

    I agree, the kinect camera is argued as a benefit by Microsoft fanboys and reputation mangers, but the casuals are going to buy the cheaper consoles. The casual buyers are going to look at 2 similar systems that have the same multiplat games, like COD and Battlefield 4, and they will buy the one that's cheaper.

    The xbox One also keeps all their features and apps behind their xbox live gold paywall, which the PS4 does not do. Casual buyers will not pay $500 for a video game console that has netflix, Hulu and everything else locked behind Microsoft's $60 xblive gold paywall. The voice commands are also only going to be available in 5 countries at the time of xbox one's launch in November. It is only launching in 13 countries. How could they not get the voice commands for kinect to work in more than 5 countries?

  • Report this Comment On August 31, 2013, at 10:27 PM, kev72 wrote:

    My cable box is terrible, $499 is an fine price to pay to get rid of the trash my cable guys call a cable box. The new XB says it can overlay over it and I never have to see it again.

  • Report this Comment On August 31, 2013, at 10:30 PM, moonroverer wrote:

    I love how M$ fanboys list off crap features when justifying cost, and then try to rip the feature ridden PS3's initial price. The first gen PS3 was FULLY backward compatible: it had a built in PS2 core (no games you say?), Blu-ray: no more multi-disc games fully HD compliant, built in WiFi and Bluetooth, non-proprietary user replaceable hard drive, a free online network, and my favorite of all: after 8 years my first gen machine STILL WORKS! What does the Xbox One have? A marketing spying tool called Kinect, a TV pass-through, and an ugly, oversized box with a fire starter (aka power supply).

  • Report this Comment On August 31, 2013, at 10:46 PM, WillT82 wrote:

    yeah but here is the kicker, Amazon gives all of us plenty of time who preordered the Xbox one to save up the $500 since the money isn't taken out until November.

  • Report this Comment On August 31, 2013, at 10:49 PM, ShadowOfTheVoid wrote:

    Well, a Motley Fool article on video games actually made a good point for a change (then it messed it all up by suggesting that the Amazon console might amount to something, but I digress). The Kinect being bundled with the XBO is one of only two major qualitative difference between it and the PS4, the other being exclusives. For most people, a camera with limited use will not be worth the $100 higher asking price. Unless they really want Halo or one of the Xbox brand's other relative handful of exclusives, they'll likely go with the PS4. They'll look at one system that costs $400 and another that costs $500 and ask themselves "Hm. Which one should I buy to play Call of Duty/Battlefield/Assassin's Creed on?" Odds are, they'll go with the one that costs $400. The XBO will at best match the PS4's sales in America, but given the PlayStation brand's strength globally, Sony will utterly dominate the eighth generation.

  • Report this Comment On August 31, 2013, at 11:22 PM, niwink wrote:

    Too much for a gaming console. Especially when the marketing is mostly based online experience rather than the gaming experience although they have good gaming titles. What I hate the most is they milk the product by adding additional downloads only to compete w/ PC platforms. If I buy a game it should have to come w/ everything else so I can further explore enjoy benefits of it. Than having to put my credit card information into a gaming platform both consoles have this feature. By agreeing to policy that's the way enjoy games nowadays. If somehow credit cards are hack were is the compensation? Then we start over again and again. I do agree though that asking five hundred is a lot. In desperation to anyone who disagrees will pay that amount to play it and that market idea is probably a bad idea. We can only hear how they react when they first get it and flaws.

  • Report this Comment On August 31, 2013, at 11:24 PM, deputyspade wrote:

    @kev72, you still need a digital cable box and be subscribed to digital cable for the tv features to work on xb1. The xb1 will not replace your cable box. From what I've read, Microsoft only has a deal with Comcast Cable and no other cable companies. That means the tv feature will only work if you are a Comcast digital cable subscriber. If you only have standard cable service, it will not work either. You have to have a cable box. None of these tv "features" will work outside the US either, as of right now.

  • Report this Comment On August 31, 2013, at 11:25 PM, niwink wrote:

    Expose the flaws. Three months and counting so all the machines produce should work properly for every XBOX1.

  • Report this Comment On August 31, 2013, at 11:26 PM, JaredM80 wrote:

    you can remove your credit card information. I do it all the time.

  • Report this Comment On September 01, 2013, at 1:18 AM, shadow4orce wrote:

    did you really just compare the xbox one to the rt? you should rethink everything you just wrote, and consider what the xbox one is bringing....of course it's $100 more. it's going to dominate just like it always has regardless of price.

  • Report this Comment On September 01, 2013, at 2:58 AM, joeuser23 wrote:

    I do not want and have no need for their goofy motion sensor. Thank you Sony for leaving that decision up to the consumer.

  • Report this Comment On September 01, 2013, at 3:42 AM, smoothi1981ivan wrote:

    I'm not saying I like the price.. But it is worth it. Xbox has its Kinect 2 and Playstation has its PS Eye.. Of course the Eye seems a little lower quality than the Kinect 2. Technically If Microsoft was to sell the Kinect 2 separately it would probably run up another $200. Only thing I don't like is the required Xbox Live to get full experience, and the extra rechargeable battery pack you need to purchase for wireless. Have to think though. The Ipod and Iphone does the same thing an android OS does. That don't stop them from selling millions.

  • Report this Comment On September 01, 2013, at 3:53 AM, drjekelmrhyde1 wrote:

    Enjoy using tape to get rid of the huge blue glowing light on your PS4 controller while plugging it in to your PS4 10 feet away because the built in battery died. Good luck with Sony's servers not going dead for day because they can't afford to have as many as Microsoft.

  • Report this Comment On September 01, 2013, at 4:35 AM, ectogamit wrote:

    I'll stick with my PC, it has 3 monitors, 6(plus 6 virtual) cores, 24GB of RAM (for now), Video card has 4GB of RAM and at least over 1500 CUDA cores. And my system is out of date by today's standards, but no game console will ever touch this kind of performance.

  • Report this Comment On September 01, 2013, at 6:54 AM, colonelcool wrote:

    I'm not a hardcore xbox fan, I enjoy playing halo and it's exclusives. Bottom line, even with the kinect camera I can't see the justified price of $499 when the Ps4 Has more powerful hardware and could sell at $399. Xbox initially tried blocking used games, required internet, and kinect. Even though they retracted those features, I lose most my respect for the company just because they THOUGHT it was a good idea at the first place. Their idea; predatory fee and control over the user. simple.

  • Report this Comment On September 01, 2013, at 8:40 AM, humbleO wrote:

    As long as the xbox doesn't break like the 360 it will be worth it. 1 ps3 last as long as 3 360's. I know I am on my 3rd and still the same piano black ps3.

    Each companies exclusives are worth what ever system you like.

  • Report this Comment On September 01, 2013, at 9:43 AM, butthead2u wrote:

    Kids make the difference! Kids did not care about Blue Ray DVD's and therefore it was not a key selling feature for PS3! The Kinect unit, if it has better games this time, could be a key feature to kids.

    In addition to functionally operate the Xbox One, the Kinect unit along with Skype can lead to new disruptive businesses. Imagine how convenient it would be to be checked by your doctor without even going there. The doctor could determine if you need to come in (of course depending on the ailment).

    The one that we don't know about is interactive programming which watching programs has already exceeded gaming so it will be big.

    The Kinect will definitely be worth the extra $100.

  • Report this Comment On September 01, 2013, at 5:23 PM, SubvertedNation wrote:

    Are you actually going to pay these clowns to put a machine in your house that will spy on you for the NSA? Don't be so gullible folks.

  • Report this Comment On September 01, 2013, at 11:11 PM, Dimmer13 wrote:

    i guess nobody realized that Sony came up with their price like an hour before their press conference because they waited till Microsofts was done to find out what their price was going to be. Sony had an advantage because of that fact alone. Sony could easily have had the same price or higher. same goes with the restrictions. just because one is cheaper doesnt mean its the better console. Just look at apple, they have the higher prices for computers and phones and they are supposed to be the best. i dont see people with anything but apple products...they are not buying the cheaper products. Just a thought

  • Report this Comment On September 01, 2013, at 11:29 PM, JaredM80 wrote:

    Where is proof they came up with it an hour before?

  • Report this Comment On September 02, 2013, at 12:36 PM, dandiedan wrote:

    The PS3 was released later than the Xbox 360 and at a significantly higher price. It is (some seem to deny that here) the most sold console in the world, despite its higher price and the later release. So, what does this tell us? Some conclude from this that the Xbox One will also be sold the same as before, despite its higher price. I conclude from this that Sony has a much better reputation in gaming, the better exclusive titles (this can be debated), and a loyal customer base (which waited for the PS3 and paid its higher price).

    The Xbox 360 was cheaper, was available one year before the PS3 and offers Kinect. Still, it didn't sell as good as the PS3 (in absolute numbers, even more in sales per year).

    Now we have an Xbox One with Kinect and 100$ higher price, released at the same time with the PS4 (worldwide, maybe even later).

    What makes you guys think that the Xbox One will be sold more than the PS4? In the US probably, never ever on a global scale. Especially not with all the mistakes they made (NSA box, no used games etc.), not with Kinect that already wasn't a seller for Xbox 360 (few games really use it nowerdays), not with a TV option (which only interests US citizens, if any), not with its lower performance and certainly not for 100$ plus.

    I guess Microsoft will adjust the price soon to 400$ but that won't help, since the lower price of the Xbox 360 already didn't make it the better seller.

    I expect Sony to get a 2/3 share of the high end console market this round.

  • Report this Comment On September 02, 2013, at 4:40 PM, ZSaber wrote:

    Wow dandie. That is some terrible misinformation saying the ps3 is the most sold. In order, the most sold goes ps2, Nintendo ds, playstation, wii, game boy advance, and then ps3

  • Report this Comment On September 03, 2013, at 2:33 AM, dandiedan wrote:

    Ok, I wasn't precise. I didn't mean handhelds and not legacy consoles. I know, the Wii sold better, but also not anymore. The best selling console these days, not counting handhelds, is the PS3.

    The Wii is outdated, the Wii U doesn't sell at all. So, the market is basically left to Sony and Microsoft - where Sony has better chances when looking into the past.

  • Report this Comment On September 03, 2013, at 1:48 PM, CharlesClarke3rd wrote:

    For $100 you get: Double the gamers, double the gaming resolution, an extra D of motion detection (Kinect 3D Motion Detection), the absence of a neon color shining out the back of your controller (Used on PS4 to find the controller by the PS eye webcam motion detection system). Kinect just knows where all the controllers are and knows who is holding which controller. Talk about value. Plus its known the Microsoft will ship it with a game. Rock on. Project Spark (Minecraft with graphics) will be a free dowload! How do you beat that. I don't think you can. Sorry Sony, you are a lame duck and because you lied to gamers about used games (leaving it up to publishers just like XBox), I will boycott your products. I will soon throw away my Sony Bravia 3D TV because you disgraced yourself so bad. PATHETIC!

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