Xbox Boss Explains How Microsoft Plans to Make Xbox Consoles More Affordable for Consumers

By Ben Petchey

June 15, 2016

A slimmer Xbox One coming August this year? A new, more powerful console Holiday next year? How can Microsoft expect consumers to be able to afford two new upgrades within a year of one another? Perhaps an Xbox Live subscription could help subsidize a new Xbox console purchase?

Xbox boss Phil Spencer responds:

“To some extent, that model already plays. I mean, most of the hardware that’s out there – if you look at the fully burdened costs of all the design work and everything else, is not really sold at a profit. Most of it’s sold at break-even to a loss. And the model is I’m selling games on top of that and I have services that I sell on top of that. In terms of subsidizing even more, we looked at this at the tail of 360, of do we go and actually create – effectively they’re financing plans, because in the end it’s all, “Ok, how much do you pay up front and how much do you pay over time and what’s the interest rate on that?” There’s no secret math there, right? It’s all pretty straightforward in terms of how the business runs. And there could be models where you’d want to say, “Is there some kind of plan that I’m on?” Clearly the cell phone model has data plans that they attach… we don’t really have a data plan necessarily that we would add on top of. If I was to add something on top of your purchase today, buy your next console early or something, in the end it’s just a financing or a layaway plan, depending on how you look at it for the model.”

Spencer continues:

“We want to focus on making consoles as affordable as we can. I love that Xbox One S is $299. Today we announced that the original Xbox’s promotional price is at $279. What I can say to the price sensitive customers, which is a vast majority of the customers that are out there, you go buy one of those consoles now and start building the library of games that you want to play, when you move to Scorpio, if you ever do, those games are going to continue to run just like we did with 360 back compat and we’re going to continue to invest in the experience for you across the whole family and making sure that as you upgrade, when you upgrade, if you upgrade, you feel like you’re getting value in the new hardware but your experience is also continuous with what you’ve done before.”

Announced during Microsoft’s E3 2015 press conference, the Xbox S is a 40% slimmer version of the Xbox One with added HDR and 4K video support. The Xbox Scorpio is a more powerful console that brings 6 teraFLOPS of computing power with a 8-core CPU and over 320 Gb/s of memory bandwidth.

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Ben Petchey

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