Wedbush Securities analyst Michael Pachter based his estimates, in part, on the cost of materials for the speculated specifications for each console. Microsoft's Xbox One gaming console. (Credit: James Martin/CNET) When Microsoft's Xbox One goes on sale before the end of year, it should cost $399, $50 more than the Sony's PlayStation 4, likely to debut at the same time, according to estimates by Wedbush Securities analyst Michael Pachter. The analyst made his estimates in a research note prepared in advance of next week's E3 video game conference. He based those estimates on the cost of materials needed to build the consoles based on speculation about the specifications for each box. Pachter also took into account the launch prices for the Xbox 360 and PlayStation 3. The Xbox 360 premium edition debuted at $399 in November 2005 and went onto become the best selling console in the United States in the current generation. The top-end PlayStation 3, with a 60 gigabyte hard drive, initially sold for $599, a price Pachter wrote "negatively impacted its long-term popularity." A Microsoft spokesperson said the company would looking into Pachter's report but declined to immediately comment on it. Sony declined to comment on the report. Pachter believes both Microsoft, Sony, and their various partners will likely offer some subsidies to offset the cost of the consoles. Given that the Xbox One includes the ability to watch live television, cable and satellite television operators might offer discounted boxes in exchange for multiyear contracts. Similarly, given that the Xbox One depends in large measure on being connected to the Web, Internet Service Providers could offer a subsidy as well. And Microsoft could offer discounts for gamers who purchase long-term commitments for its Xbox Live Gold service. The PlayStation 4 offers fewer opportunities for subsidization, Pachter writes. But Sony, too, could discount the console for gamers that purchase its PlayStation Network subscriptions. And he adds that Sony could well add some of the features Microsoft has promised in its Xbox One, which could open up new price subsidies possibilities. "We believe that many of the multimedia functions demonstrated at the Xbox One reveal event could be emulated by Sony in the next year or so through a firmware update," Pachter wrote. Pricing speculation is something of a sport in the days and weeks before console makers release actual price tags. In April, longtime Microsoft blogger Paul Thurrott reported that the next Xbox would cost $499, or $299 for customers who also buy a two-year Xbox Live Gold subscription for $10 per month. Previously, Thurrott accurately broke the news about the Xbox One unveiling date of May 21. Pachter also expects all three console makers, including Nintendo, to drop prices on the previous generation of consoles in advance of the holidays. Microsoft and Sony could drop their prices by $50 or more, he wrote, while the Nintendo Wii could drop to $99. Nintendo's Wii U, which launched last year but has seen tepid sales, could also see a $50 price cut, Pachter wrote. "(W)e continue to believe that Nintendo misfired with the Wii U, and believe that the next-generation of consoles will see a market share shift from Nintendo platforms to Microsoft and Sony platforms," Pachter wrote.
Wedbush Securities analyst Michael Pachter based his estimates, in part, on the cost of materials for the speculated specifications for each console.
Microsoft's Xbox One gaming console.
(Credit: James Martin/CNET)
When Microsoft's Xbox One goes on sale before the end of year, it should cost $399, $50 more than the Sony's PlayStation 4, likely to debut at the same time, according to estimates by Wedbush Securities analyst Michael Pachter.
The analyst made his estimates in a research note prepared in advance of next week's E3 video game conference. He based those estimates on the cost of materials needed to build the consoles based on speculation about the specifications for each box.
Pachter also took into account the launch prices for the Xbox 360 and PlayStation 3. The Xbox 360 premium edition debuted at $399 in November 2005 and went onto become the best selling console in the United States in the current generation. The top-end PlayStation 3, with a 60 gigabyte hard drive, initially sold for $599, a price Pachter wrote "negatively impacted its long-term popularity."
A Microsoft spokesperson said the company would looking into Pachter's report but declined to immediately comment on it. Sony declined to comment on the report.
Pachter believes both Microsoft, Sony, and their various partners will likely offer some subsidies to offset the cost of the consoles. Given that the Xbox One includes the ability to watch live television, cable and satellite television operators might offer discounted boxes in exchange for multiyear contracts. Similarly, given that the Xbox One depends in large measure on being connected to the Web, Internet Service Providers could offer a subsidy as well. And Microsoft could offer discounts for gamers who purchase long-term commitments for its Xbox Live Gold service.
The PlayStation 4 offers fewer opportunities for subsidization, Pachter writes. But Sony, too, could discount the console for gamers that purchase its PlayStation Network subscriptions. And he adds that Sony could well add some of the features Microsoft has promised in its Xbox One, which could open up new price subsidies possibilities.
"We believe that many of the multimedia functions demonstrated at the Xbox One reveal event could be emulated by Sony in the next year or so through a firmware update," Pachter wrote.
Pricing speculation is something of a sport in the days and weeks before console makers release actual price tags. In April, longtime Microsoft blogger Paul Thurrott reported that the next Xbox would cost $499, or $299 for customers who also buy a two-year Xbox Live Gold subscription for $10 per month. Previously, Thurrott accurately broke the news about the Xbox One unveiling date of May 21.
Pachter also expects all three console makers, including Nintendo, to drop prices on the previous generation of consoles in advance of the holidays. Microsoft and Sony could drop their prices by $50 or more, he wrote, while the Nintendo Wii could drop to $99. Nintendo's Wii U, which launched last year but has seen tepid sales, could also see a $50 price cut, Pachter wrote.
"(W)e continue to believe that Nintendo misfired with the Wii U, and believe that the next-generation of consoles will see a market share shift from Nintendo platforms to Microsoft and Sony platforms," Pachter wrote.
