Microsoft says it's being careful about the Xbox Series X's price this time around. It's not eager to re-live the infamous E3 2013 catastrophe.
In a consumer industry, cost is king. Microsoft and Sony understand that console sales rely on costs. So how much will the Xbox Series X be priced at? No one knows for sure, but Microsoft says it's willing to adjust and be flexible.
"We're going to make sure we stay agile on our pricing and that we have a good plan going into launch," Phil Spencer said in a recent IGN Unlocked interview.
"There were other policy things into the Xbox One and some focus things in terms of learning that I don't think it's just about price. You obviously have to be at a competitive price, you have to have an offering that meets the needs of the customers that you want and exceeds what they expected, and I feel good about our response."
The Xbox Series X has every right to be an expensive machine. Analysts peg the system at $499 because of its higher-end specs, which essentially mirror an enthusiast PC. The Series X's 12TFLOP Navi 2X GPU, 3.8GHz 8-core Zen 2 CPU, 16GB of GDDR6 RAM, and customized PCIe 4.0 NVMe M.2 SSD all drive the cost up a bit--so much that Microsoft has shaved features like HDMI-In, optical audio, and IR blasters from the Series X.
Both Sony and Microsoft have been tight-lipped on pricing though.
PlayStation 5 pricing
The only thing we've heard from Sony is that the PlayStation 5 is difficult to price because of competition. This could mean Sony is competing with other hardware-makers for critical components like RAM and other chips, or it could hint Sony might be holding off until Microsoft announces the Series X's price tag.
"The PS5's cost is not very clear or visible because we are competing in the space. So it is very difficult to discuss anything about the price at this point in time. And depending on the price level, we will have to determine the promotion that we are going to deploy and how much cost we are prepared to pay," Sony CFO Hiroki Totoki said in a February Q&A session.
There's reports the PS5 could be priced as low as $399. Console architect Mark Cerny recently said the PS5's odd 825GB SSD capacity reflects this, and that Sony engineers have created a cost-effective yet powerful cooling solution for the PlayStation 5.
Other reports, like the one from Bloomberg, suggest Sony is struggling with the PS5's price due to its robust cooling array.
Microsoft's trump card: Lockhart
Even if the PS5 is $399, Microsoft could have a trump card.
Rumor has it Microsoft is making two next-gen consoles: The higher-end beastly Xbox Series X, and a lower-end but cheaper console codenamed "Lockhart" that hits 1440p 60FPS. Microsoft could announce the Xbox Series X at $499, prompting Sony to announce the PS5 at $399, then Microsoft could follow up with a $299 Lockhart system.
No one knows for sure how this will play out, but it's possible the agility Phil Spencer mentioned isn't for the Xbox Series X, but the unannounced Lockhart system.
Then again, Microsoft could take the financial loss more than Sony could. PlayStation typically pulls in over 20% of Sony's quarterly revenues, but Xbox rakes in ~10% of Microsoft's billion-dollar earnings. Of course it's important to remember Microsoft makes a lot more than Sony does due to its huge Windows and cloud infrastructures.