Secondly, Xbox’s greatest strength was on-line. The live service is great but Live launched AFTER Xbox hit the market. With Live in full swing now, many expected Live for 360 to be something even more awesome because the service would be up and running right along with the console during launch. Without an HD, that limits the potential of what 360 users can do with on-line. Sure, there are now larger memory cards and it will help in most cases, but it will simply push Xbox 360 closer to the PS3, which many predict will be so powerful and have so many expensive proprietary components that Sony is unlikey to pack-in a HD. So what happens to product differentiation? How does MS complete exactly with Sony? You compete by differentiating yourself and Microsoft just limited its ability to compete with the PS3.

“But there is the $400 HD bundle and many hard cores will buy it…” comes the retort. Yes, I would say, but anytime you do something like a 2 SKU strategy, you fragment your market and make the 3rd party’s job a lot harder when it comes to supporting additional features. Companies like EA will always support the lowest common denominator and while they will probably throw a bone to the HD owners, they certainly won’t go out of their way to cripple their non HD games to force peopl eto get an HD. It’s not in their best interest to do so. And here’s the thing. Microsoft is not Nintendo so 3rd party support is paramount. 2 SKUs confuse 3rd parties, increase their risks when they plan a game around the HD and many just won’t bother doing it. This again goes back the differentiation with PS3. Xbox 360 unfortunatelly just got screwed again.

Square-Enix recently revealed FF XI for the Xbox 360. Big deal right? That’s a three year old game on the PC and PS2. But here’s the thing. Square-Enix hasn’t been too happy with Sony for their half-assed HD support and Sony’s decision to remove the HD port from their new slimmed down PS2. I’m sure Square would have preferred a HD ready PS2 as it would help their FF XI installed base greatly. Microsoft had a golden opportunity to give Square exactly what Sony wasn’t willing to give Square… time of day. Back in 1997 when Sony bent over backwards to steal Square from Nintendo, Sony needed square. Now that Sony has a near console monopoly, Square-Enix has been relegated to only one of many big publishers for Sony. Microsoft could have stolen Sony’s thunder by cozying up to Square to land more exclusives even if they are unable to steal Square-Enix completely away from Sony. Just exclusives would have been a major major coup for Microsoft. But their 2 SKU decision probably hurt their partnership with Square-Enix. I’m not predicting Square to abandon Microsoft, but it weaknes Microsoft’s appeal to Square and if the 360 don’t fly in Japan, except a quick backdoor exit by Square-Enix as they switch attention to the Nintendo Revolution, which does offer something S-E wants, Wi-Fi and wireless support between the Revolution console, and the Nintendo DS which Square is keen to emphasize is the kind of cross platform on-line playability they are excited about.

but it’s still true that to get all that comes with the 360 for the x-box (at launch price) would have cost almost exactly the same, and that’s again overlooking all the new functionality and power the 360 has. not everyone wants a media centre extender, but for those of us that do, that’s a lot of bang for your $400. for those that don’t… wait till it comes down in price. it will… and there doesn’t look to be a shortage of great current gen games until march next year.

I think the initial reaction most people are having is sticker shock. Sure, this isn’t the first system to cost more than $299, but the 3DO and Atari Jaguar aren’t exactly household names…as consoles OR software developers. (ZING) It is just a bit of a shock to see one of the major console players to bring in a console at that price point.

Sure, you say, it is TWO price points. Let’s stop kidding ourselves about two-tiered pricing. The $399 version is the only version. Screw the hard-drive, the wireless controller is what everyone should be paying attention to. I would much rather get the wireless “smart” controller than the wired one, and would probably pay the extra hundred just for that.

In any case, the $399 version, as has already been pointed out, is a crazy-stupid deal. I’m sure “M$” is taking a beating on this one. You thought they were taking a hit on the XBox, if a HDD costs $100 alone, what kind of hit are they taking with all the stuff you are getting on the premium deal.

I’ve been back and forth on this issue and ultimately, I’ve decided Microsoft made the right decision. I would have prefered a “no-spin” version and just one SKU for $399 but I don’t always get what I want.

One final thought on the pricing of the 360. We all knew it was going to be more expensive to be a gamer this new generation than the present one. We also know that Sony has been preparing us for some silly price on the Playstation 3. Part of the anxiety of a $399 console from Microsoft is the implication that the Playstation 3 will be $499 or $599. Which, I’m sure, will sell like its going out of style anyway.

And with things like Inflation and increased power/abilities thrown in, I dont see why anyone can complain. I wont get a 360, but the price seems very reasonable to me.

I wonder how long it will be before they lower it though.