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Analysis Hardware The Price of Next Generation? | Let's Talk (NX Gamer)

Kazza

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With this discussion being around the most impacting for the next generation start, the costs. Here I talk about the business side more than the technical one, what it means, the choices, the strategies and the SKU's coming into play.


Here is NXGamer NXGamer 's prediction:



Note:
the Series S price is based on it having a disc drive, so the price will be lower if it doesn't include one.
 
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Kazza

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While I personally think the prices he predicts for the regular PS5 and Series X are probably about right, I think MS will want to put more clear water between the Series S and the disc-less PS5. For many people, for an extra $50 they would be tempted to just buy a 9TF disc-less PS5 rather than a 4TF Series S.
 
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-Arcadia-

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I do feel like $500 is the magical price point where we're headed. One X made it okay, and these new systems need more financial headroom in manufacturing costs + R&D.

It just makes sense that that's where we'd wind up. I'm open to $400 or $450, but they don't seem terribly likely to me.
 
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StreetsofBeige

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Does he explain why he thinks PS5 is 479 pounds, whereas the other PS5 prices and SeX prices are all 499 in their currency?
 

Kazza

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Does he explain why he thinks PS5 is 479 pounds, whereas the other PS5 prices and SeX prices are all 499 in their currency?
He does say "maybe £479" for the X, even though he wrote £499, so maybe it's just a price he changed his mind about but forgot to update.
 
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PS5 BD
$399 to $499 with 1x free game (Sony 1st Party only)
PS5 DE
$399 to $499 with 1x free game (Sony 1st Party only,), 1x year PS+, camera incl. + stand
PS5 DE THE "YA CRAZY!" MULTIMEDIA PACK
$999 1.6TB with 15x games (Sony 1st Party only), 5x year PS+, a 2nd controller and 5x year of PS Now, PS5 camera, charger, remote, 1x adam sandler movie incl.
 

NXGamer

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Does he explain why he thinks PS5 is 479 pounds, whereas the other PS5 prices and SeX prices are all 499 in their currency?
As above, I wanted to keep the structure based on the UK taking the hit due to exhange rates. I have Both PS5 and XSX at $499/Euro so that is the same price. The problem with UK pricing is it can fluctuate so much and the XSX may target the same level to keep even, it will be close and the DE and S are the options both sides have to work within a "scale" they have.
 

prinz_valium

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Ps5 Digital Edition will be the same as Ps5, just without the disk drive and $100 cheaper
Lockhart will have less RAM, a lot smaller SOC, way smaller footprint cooling and housing, cheaper and smaller PSU, no disk drive, no dual motherboard, and maybe even a smaller SSD, but $150 cheaper at best


How can anyone seriously make these claims?
 

ZehDon

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Hmmm. Series S for $50 less than the PS5 digital edition? Yeah no. Microsoft is building a device to take the casual, impulse buy market at launch - that market isn't impulsing buying a $300 console. The PS5 digital for $399 seems entirely plausible - but $150 price difference isn't enough to differentiate the Series S from the Series X, given the Series S is packing only 1/3 of the graphical power. Being that the Xbox One Series X still goes for USD$399, the Series S is going to need to come in dirt cheap to scoop up its intended market. It's not intended to be profitable hardware - it's a gateway to Microsoft's services to score that reoccurring revenue.

Moore's Law is Dead put out an interesting video discussing the concept of a zero dollar console. That is to say, it'll employ a subscription model that includes the hardware. Something like $25.00 a month for two years for the console and game-pass, to get that reoccurring revenue flowing. I'm expecting something off-the-wall like this when Microsoft unveils their pricing strategy - they're simply not going to compete 1:1 with Sony anymore, because they know they can't win. A lot of this price speculation is using outdated thinking in my opinion.
 
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THE:MILKMAN

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As above, I wanted to keep the structure based on the UK taking the hit due to exhange rates. I have Both PS5 and XSX at $499/Euro so that is the same price. The problem with UK pricing is it can fluctuate so much and the XSX may target the same level to keep even, it will be close and the DE and S are the options both sides have to work within a "scale" they have.
Honestly I don't believe exchange rates even apply? I mean 1, the PS4 and Pro both launched at £349 3 years apart at very different exchange rates at the time and 2, aren't all console parts purchases done in US $?

I'm no expert but I think there is a little overthinking going on regards pricing! But if they really are higher priced than ever I know what I'll be doing.
 

Thirty7ven

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Moore's Law is Dead put out an interesting video discussing the concept of a zero dollar console. That is to say, it'll employ a subscription model that includes the hardware. Something like $25.00 a month for two years for the console and game-pass, to get that reoccurring revenue flowing. I'm expecting something off-the-wall like this when Microsoft unveils their pricing strategy - they're simply not going to compete 1:1 with Sony anymore, because they know they can't win. A lot of this price speculation is using outdated thinking in my opinion.
The thing is, how does MS apply that strategy?

You enter a media store in the UK and you want a Xbox Series S. Look for it on the shelves, pick it up, but before you leave the store you must sigh a contract? Ok. Well that's going to rule out a lot of people heh?

Xbox all access already exists and as an option it's cool, but the model isn't having much success penetrating the market. Consoles aren't phones.
 

ZywyPL

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Gonna watch the vid after work, but from the pictures in OP I can see the Series S/PS5 Digital prices seems to be off, there's way too little difference between them given the (rumored) specs. Not to mention that if Sony would really wanted to take such loss on the PS5D, then so would MS with XBS. 499/399 for PS5 seems like a given, 499 for XBX as well, but without official Lockhart specs it's really hard to speculate, can be 299, can be 249, can even be 199 as per latest rumor, it all depends how much it will cost to manufacture and how much loss MS will be willing to take.
 

NXGamer

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Honestly I don't believe exchange rates even apply? I mean 1, the PS4 and Pro both launched at £349 3 years apart at very different exchange rates at the time and 2, aren't all console parts purchases done in US $?

I'm no expert but I think there is a little overthinking going on regards pricing! But if they really are higher priced than ever I know what I'll be doing.
It is not about the purchase cost, it is the revenue stream based on the sale. This why you have a varied level of prices for UK at times, it is not consistent, companies buy Dollars up front based on the purchase rates at the time. But the sale rate is all dependant on many other factors such as Import Duty (Electronic items are rife with this) and Bonded warehouse, deferred rates and due to the EU changes this may also be a factor. Exchange rate was a high level quote, pricing is vital and why entire company departments are dedicated to it.
 
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NXGamer

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Hmmm. Series S for $50 less than the PS5 digital edition? Yeah no. Microsoft is building a device to take the casual, impulse buy market at launch - that market isn't impulsing buying a $300 console. The PS5 digital for $399 seems entirely plausible - but $150 price difference isn't enough to differentiate the Series S from the Series X, given the Series S is packing only 1/3 of the graphical power. Being that the Xbox One Series X still goes for USD$399, the Series S is going to need to come in dirt cheap to scoop up its intended market. It's not intended to be profitable hardware - it's a gateway to Microsoft's services to score that reoccurring revenue.

Moore's Law is Dead put out an interesting video discussing the concept of a zero dollar console. That is to say, it'll employ a subscription model that includes the hardware. Something like $25.00 a month for two years for the console and game-pass, to get that reoccurring revenue flowing. I'm expecting something off-the-wall like this when Microsoft unveils their pricing strategy - they're simply not going to compete 1:1 with Sony anymore, because they know they can't win. A lot of this price speculation is using outdated thinking in my opinion.
I guess you did not watch my video then?


Gonna watch the vid after work, but from the pictures in OP I can see the Series S/PS5 Digital prices seems to be off, there's way too little difference between them given the (rumored) specs. Not to mention that if Sony would really wanted to take such loss on the PS5D, then so would MS with XBS. 499/399 for PS5 seems like a given, 499 for XBX as well, but without official Lockhart specs it's really hard to speculate, can be 299, can be 249, can even be 199 as per latest rumor, it all depends how much it will cost to manufacture and how much loss MS will be willing to take.
As above in the video I state IF they go full Digital with XS then $299 is the target and possibly £249 in the UK. The game is being played here by both and the reason both companies have gone with dual entry points.
 
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THE:MILKMAN

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It is not about the purchase cost, it is the revenue stream based on the sale. This why you have a varied level of prices for UK at times, it is not consistent, companies buy Dollars up front based on the purchase rates at the time. But the sale rate is all dependant on many other factors such as Import Duty (Electronic items are rife with this) and Bonded warehouse, deferred rates and due to the EU changes this may also be a factor. Exchange rate was a high level quote, pricing is vital and why entire company departments are dedicated to it.
Fair enough. Like I say I'm no expert in this area. All I know is that if both XSX and PS5 disc versions come in at your proposed £499 I'll just wait 6 months for the inevitable price drop.

PS3 and Xbox One/Kinect at £425 and £450 respectively tanked and came down to £299 in months.
 

NXGamer

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Fair enough. Like I say I'm no expert in this area. All I know is that if both XSX and PS5 disc versions come in at your proposed £499 I'll just wait 6 months for the inevitable price drop.

PS3 and Xbox One/Kinect at £425 and £450 respectively tanked and came down to £299 in months.
Hey, only Sony and MS know the target but the base hardware in both these machines make them expensive and £399 is too low IMOP, but they could surprise us all and come in around that. I feel the dual SKU approach tells this is the leway option, in part, subsidised by the high ticket item.
 
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THE:MILKMAN

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Hey, only Sony and MS know the target but the base hardware in both these machines make them expensive and £399 is too low IMOP, but they could surprise us all and come in around that. I feel the dual SKU approach tells this is the leway option, in part, subsidised by the high ticket item.
I'm most excited/scared about the damn prices than anything else right now! Can I ask, did you see ArmGunar's Sony FY20 analysis about price (the day before the PS5 reveal) at Era and if so what you thought of it?
 
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NXGamer

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I'm most excited/scared about the damn prices than anything else right now! Can I ask, did you see ArmGunar's Sony FY20 analysis about price (the day before the PS5 reveal) at Era and if so what you thought of it?
I did not no, can you link me if now too much issue?
 

ZehDon

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I guess you did not watch my video then?
I did... hence why I brought up the Moore's Law is Dead video, because you broached the same topic that he dedicated his video to. The point of contention here is that I'm not so sure Microsoft would offer a non-subscription model for the console, because, frankly, who's it intended for at your estimated sticker price with the rumoured hardware? Perhaps my post wasn't clear there - I'll try and be clearer in the future. From my perspective, the hardcore day one early adopters are going for the Series X. If Microsoft want the casual market to jump in, they're pricing this machine into impulse buy territory. For the Series S, it's anemically speced to be priced within spitting distance of the PS5's Digital Version. A 1080p30 machine in a 4k60 world is going to priced into a different product bracket, not the lower end of the same bracket. So, while the hardware BOM might suggest one thing, I think we're going to see a different tactic altogether with the Series S - hence my expectation of a sub-only model of some kind, and my disagreement with your pricing estimate.
 
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WelshBluebird

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PS3 and Xbox One/Kinect at £425 and £450 respectively tanked and came down to £299 in months.
  1. Inflation means that £425 when the PS3 launched is now £594. That £299 price point from 2007 is actually almost £420 in todays money. Similar story for the Xbox one's price points (though worth saying the Xbox one waited a fair bit longer to hit £299 compared to the PS3).
  2. The pound continues to get weaker when compared to the dollar. The difference is night and day compared to when the PS3 was released, and is still pretty poor compared to when the Xbox One came out.
Given both companies are making pretty big bets to try to offer a cheaper version of their console, I'd be willing to bet that the full whack high end machines are not going to be hitting £299 anytime soon. The cheaper machines though - pretty likely, certainly lockhart could well launch at that price.
 
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While I personally think the prices he predicts for the regular PS5 and Series X are probably about right, I think MS will want to put more clear water between the Series S and the disc-less PS5. For many people, for an extra $50 they would be tempted to just buy a 10.28TF disc-less PS5 rather than a 4TF Series S.
Fixed. Your welcome to provide proof of that 9TF claim. If you made mistake you should really change it or clarify it.

On topic: Those prices look about right to me except that I think the Lockhart would be 50$ cheaper with or without a disk drive. 349$ just seems to close to the PS5s DE at 399$.
 
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NXGamer

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I did... hence why I brought up the Moore's Law is Dead video, because you broached the same topic that he dedicated his video to. The point of contention here is that I'm not so sure Microsoft would offer a non-subscription model for the console, because, frankly, who's it intended for at your estimated sticker price with the rumoured hardware? Perhaps my post wasn't clear there - I'll try and be clearer in the future. From my perspective, the hardcore day one early adopters are going for the Series X. If Microsoft want the casual market to jump in, they're pricing this machine into impulse buy territory. For the Series S, it's anemically speced to be priced within spitting distance of the PS5's Digital Version. A 1080p30 machine in a 4k60 world is going to priced into a different product bracket, not the lower end of the same bracket. So, while the hardware BOM might suggest one thing, I think we're going to see a different tactic altogether with the Series S - hence my expectation of a sub-only model of some kind, and my disagreement with your pricing estimate.
Thanks for the reply, was not trying to be funny I did not see the link, this explains it now, cheers.

It could be, but why remove the huge portion of sales you can get from those that just want a better XboxOne with a higher choice of 60Fps which I think this machine may achieve far more often than you think if (Options) become more common this gen in Console games i.e. Target Performance, Target Graphics. I think having a Sale price owned and a Game pass linked Subscription gives them the best of both, you pick your poison just as they had for this gen.

But they could lock it down to a Game Pass only option and you get the Console free, much like a Sky+ box model, just see this as far too restricted of a POV to grow your markeplace as fast as possible as you leave money on the table, a great deal IMOP.
 

Ten_Fold

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Ps5, prices seems about right, the series X is probably right, the lockheart I can see it being $299.
 

THE:MILKMAN

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  1. Inflation means that £425 when the PS3 launched is now £594. That £299 price point from 2007 is actually almost £420 in todays money. Similar story for the Xbox one's price points (though worth saying the Xbox one waited a fair bit longer to hit £299 compared to the PS3).
  2. The pound continues to get weaker when compared to the dollar. The difference is night and day compared to when the PS3 was released, and is still pretty poor compared to when the Xbox One came out.
Given both companies are making pretty big bets to try to offer a cheaper version of their console, I'd be willing to bet that the full whack high end machines are not going to be hitting £299 anytime soon. The cheaper machines though - pretty likely, certainly lockhart could well launch at that price.
I'll just keep this short.

1, Why wasn't PS4 over £500 based on PS3's £425?

2, Why were PS4 and Pro, 3 years apart, both £349 even though the exchange rates were ~1.61 and ~1.24 respectively (and today are still around 1.24)?

For sure inflation and exchange rates can determine pricing but also might not. Depends how the platform holders feel I guess...?
 

sinnergy

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What if MS has 3 SKUs? Would be a real kicker, Series X , 449 Series X Digital, 399 and Series S 249.

maybe that’s why the keep saying family of devices .

the series X design just works without a drive present .
 
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In the video he is saying he thinks the series s will be $150 cheaper than the series X..... if this is true am curious to know what the actually difference will be for these systems.

Why spend an extra $150 just for 4K and why would MS make a 1080p only console in 2020. If the series s is only 1080p than why would someone buy that over the PS5 DE if the price gap will not be much ..... so many questions
 
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sinnergy

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In the video he is saying he thinks the series s will be $150 cheaper than the series X..... if this is true am curious to know what the actually difference will be for these systems.

Why spend an extra $150 just for 4K and why would MS make a 1080p only console in 2020. If the series s is only 1080p than why would someone buy that over the PS5 DE if the price gap will not be much ..... so many questions
That’s why I think they have 3 skus, series X , series X digital and the S.

449 - 399 - 249.
 

dcx4610

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What about the price of games? A few years back, Microsoft mentioned that they wanted to increase game prices to $69 since 4K games were most expensive to produce. I think there's a very good chance we see that for at least the AAA games.
 
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I agree with their PS5 prices, but not their Series prices, particularly Series S. Mainly because I strongly doubt Series S would have a disc drive; there's no point for it to include one if they're already making other efforts to reduce the cost by scaling back on the GPU. And since they likely know they can't sell Series S at a profit or break-even point, there's no better way to hook a Series S purchaser into the ecosystem than by forcing them to go all-digital.

Sony's basically taking the exact same approach in that regard with PS5 Digital, but the likelihood they're pricing that at $399 means a $349 Series S is just a horrible value proposition. Even $299 might be pushing it, so I can see them taking an aggressive loss-leading strategy on Series S @ $249.99 and recouping that through Gamepass subscriptions. Meanwhile they can price Series X at either $499 or even $449, though they'd be losing money on the latter (it really comes down to how aggressive they want to be, though they wouldn't be losing a lot of money on $449 Series X. Not as much as they would on $249 Series S, anyway).

They could also offer Series S through some type of subscription model, but that would be pretty hard to do through brick-and-mortar stores. Possibly through their own website, say you subscribe to a two-year locked subscription of Gamepass with xCloud (and maybe even Live) rolled in, and you basically get a "free" Series S. As long as you keep to your payments you can keep it in use. The payments would already be heavily reduced since the purchase of the console bakes into the cost, though, so maybe something like $5 a month with the first six months providing full, free access. Would brick-and-mortar retailers be okay with MS offering that type of option online through their website, without a way for retailers to do the same? Because that could perhaps result in frustration with some retailers unable to provide that type of offer.

There's not much point in them offering a similar option for Series X, IMHO. I guess they could if they wanted.

What if MS has 3 SKUs? Would be a real kicker, Series X , 449 Series X Digital, 399 and Series S 249.

maybe that’s why the keep saying family of devices .

the series X design just works without a drive present .
If that's what they're doing it would throw a curveball or two, that is for sure. I don't know how possible it would be to have Series X at $449 and a Digital Series X at $399, though. It may not provide enough incentive in the price bracket to drive people to the Digital Series X, most would probably just pick up the disc version if available.

Also with three models that means they now have to work out production logistics for three different products instead of just two, and figure out the split allocation of manufacture for them. Might over-complicate things doing that right off the bat.
 
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sinnergy

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Maybe Lockhart is much later and it’s 2 series X models . Disc and Digital but undercut in price .
 

Lone Wolf

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My predictions

PS5: $499

PS5 Digital: $449

XSX: $499

XSS: $299

the XSS will not have a disc drive.

neither company will take a $100+ hit. More like $30 max.
 
Jul 23, 2018
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Maybe Lockhart is much later and it’s 2 series X models . Disc and Digital but undercut in price .
I think this is exactly what might happen and it makes the most sense.

Am thinking they will also use the gamepass subscriptions and a payment plan strategy to get people in at a lower price.
 

KAL2006

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My final predictions with reasons why

PS5 - $500
Series X - $500

I think they both will take a small loss. I also think Series X isn't that much more expensive to produce than a PS5 even though its more powerful. PS5 having faster SSD, more expensive controller and etc will get it closer to Series X production price. Also the One X launched at $500, as this is the replacement to One X I think they will keep this price.


PS5 DE - $400
Series S - $300

Here is where things get interesting. I think Sony will take a bigger loss with PS5 DE than the normal edition but recoup their loses by getting people locked into their digital store. Also $400 is the same price as when both PS4 and PS4 Pro launched. As they have had success at that price they would one to keep one SKU at that price. As for Series S Microsoft will do the same as Sony and take a bigger loss in Series S but have people locked in to digital store to recoup cost. But because Series S is weaker they can have the same losses as Sony but price it lower. Surely by having a smaller APU, GPU, PSU, less RAM, potential smaller SSD they can cut the cost by a further $100 in comparison to PS5 DE.
 

eastwood333

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Ps5 Digital Edition will be the same as Ps5, just without the disk drive and $100 cheaper
Lockhart will have less RAM, a lot smaller SOC, way smaller footprint cooling and housing, cheaper and smaller PSU, no disk drive, no dual motherboard, and maybe even a smaller SSD, but $150 cheaper at best


How can anyone seriously make these claims?
A disc drive these days are around 20 bucks. So Sony is going to eat the other 80 bucks per unit sold? I don't buy this notion. The more likely scenario is both are the same price with the digital version having more hard drive space or it being 50 bucks cheaper than the PS5
 
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