The Xbox One will be more expensive than PS4, one particular industry analyst believes, and if true, it would see Sony and Microsoft switching places from last generation, when PS3 cost $599 and Xbox 360 substantially lower.
Wedbush Morgan Securities analyst Michael Pachter estimated that the bill of materials for the Xbox One runs at around $325, while the PlayStation 4 runs at about $275, hence their retail price point predictions.
The saving grace for Xbox One, Pachter notes, is the option of an available subsidized price through a multi-year subscription from a broadcast, cable or ISP provider.
We believe the ability to watch live TV from a cable, telco, or satellite set-top box through Xbox One could entice an MSO to drive subscriptions through a subsidised box in exchange for a multi-year contract. The ‘always connected’ requirement for the Xbox One likely means that a broadband connection will be required, suggesting to us that ISPs may have an incentive to offer a subsidy as well.
In addition, Microsoft could conceivably subsidise the Xbox One through prepaid Xbox Live Gold subscriptions (as it has done on a limited basis in the past) or premium Skype functionality as well. Similarly, Sony could subsidise the PS4 through prepaid PlayStation Network subscriptions, but unlike Microsoft, it does not have a history of doing so.
Wedbush Morgan also expects PS3 and Xbox 360 price cuts later this year when PS4 and Xbox One arrive on the market. They expect each console to see price drops of $50.
What do you think of Pachter’s predictions? Are they reasonable? Share your thoughts.