<div style='font: 9pt ; text-align: left; '>1) All three consoles were sold at a loss, but Nintendo was for a VERY short period and SOny had the head start. The point is the difference between traditional and current console economics, which he makes a pretty good point
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Huh? Come again? If that's what you think console economics is, I question your schooling. Current economics (almost in every market) is dominate-and-drive-your-competition-out-of-the-market-and-control-the-price/cost-level. It's the ONLY way to survive. That takes money...and it's a strategy that does indeed span generations. And I'm not being pessimistic...When you think of the best TV and all around electronic maker, who do you think of? Sony. How about the portable game market? Gameboy...but cell phone are making scary inroads lately.
If you look at Microsoft's business model, they are going after all technology products that are based primarily on "intellectual property"...and reduced overhead is always a good plan. All indications are that Microsoft REALLY wants the console entertainment market....and it's not that they are following some old make-money-off-the-razors plan...it just that the are willing to take a loss to wedge their way into the fray.
If he made a good point, it's sure as hell lost on me.
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2) The $389 price point was the IDEAL point. As he mentioned, they were forced to change, which ruined their economic model
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BS. IDEAL says who? Him? All cost of Microsoft's hardware is pure speculation. And they changed nothing...they said they would launch at a competative price with current consoles *wink*, *wink*, *nudge*, *nudge*
If you have any CREDIBLE information otherwise, link it.
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3) Europe price cutting was after the fact. They were willing to take a hit to break into that market 'cause they know it's basically Sony only over there. Even Nintendo is having a hard time cracking the market there. It's Sony only in Europe, has been for a long time
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Maybe you are wording it wrong...You do realize that Microsoft initiated the last price cut under the PS2 price point...in fact, last I heard, Sony wasn't willing to match the move (that was a little while ago though)...
If your point was to say "They cut their price to break into the market"... then...uhhh...yes...that IS what I said....
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4) He's talking about Sony's planned merging of their PS2 chips into one chip, to cut mfg costs in order to engage in a price war. Nintendo is prepared for it, but Microshaft has to eat the loss
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First, I hadn't heard about a new plan to merge chips. And engage in a price war? They are already at $199, how much lower can they go this early? And how is "Nintendo prepared for it"? Big statement, back it up with something.
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5) Sony invested the money in order to prepare itself for the long haul price war. They won't see the real benefit until near the end of the PS2's life, after they've paid off the cash outlay, which is where they can make killer coin
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Err...ok. Meanwhile, MS doesn't need much of an R&D budget, outsources it mfg needs and pits suppliers into competative pricing. Two totally different business models. You speculate the success of one, I'll look at the general financial well-being of other past hardware-involved companies... *cough* In case you missed that, I think MS has the right idea.
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6) While I mostly agree with your comment on this one, the parts are basically off-the-shelf parts with some modifications.
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Err...substantiate this. And differentiate Xbox parts from GC and PS2. Do you have the technical know-how? I doubt it. Do you have sources? I doubt it. In which case, you are spouting drivel and you should stop.
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7) see #4. It's an important part of cost cutting in a console
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See my response to #4. And further, is there a historical context that makes this a "proven method" of cost cutting? Not in my memory...but maybe. If so, enlighten me. Frankly, it doesn't sound right. What chips are being combined? And how is it cost effective? And once again, how is Nintendo "prepared"? The only savings that usually accompany streamlined chip production is saved time...
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The guy makes very good points, something Microshaft will incorporate into the Xbox 2. They're gonna lost a lot of money , they knew that. This round is for them to learn and get a foothold, and they're doing that.
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I stand by the fact that this guy makes ZERO good points and is only spouting the same fanboy drivel I've heard for the last year.
This guy is the idiot owner of a failing small palm-pilot software house....his opinions are fantastic and, gee, I hope Microsoft is listening to the incredible economic and console opinions this industry giant is spewing....
In the unlikely event you missed the seething sarcasm, I couldn't disagree with you on EVERY point any more.
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"If any of that sounded rude, it wasn't intended...except towards the retarded author"</div>
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