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|We spoke with Microsoft Vice President Peter Moore about Microsoft's decisions in which he explains the decisions behind the two prices, the importance of HD, the values of both SKUs, upgrading, news from the Tokyo Game Show, Halo 2, Perfect Dark Zero, the launch date, and more.|
IGN: Why did you decide to offer two SKUs, isn't that confusing for the consumer?
Peter Moore: If there is a lesson I think we have learned in the previous generation is that gamers want choice. Some gamers want simply to play a game and have none of the, in their estimation, some of the frills of the gaming experience, and price becomes paramount for them. At the same time, we believe it's important to offer them the ability to set up and upgrade. But if price becomes the key factor, we wanted to have that as well for as a choice for the consumer. $299 is a spectacular price point. And certainly in Europe in particular, I think we learned our lesson, that 479 euros and a March launch was not the optimal mix of what was going on.
IGN: How do you see the split between the two prices working out? Will it be different in North America than in Europe?
Peter: I think that a large majority of people all over the world will be buying the Xbox 360 systems ($399). Europe is a much more price-sensitive market, in particular continental Europe, where the primary mode of distribution becomes what is known as the hyper-markets. It's incredibly important for us to offer that 299 euro price point. We've got great aspirations, as you know, to build critical mass in this next generation, and doing that without offering a competitive price point in all markets is something that we thought would be a negative.
At the same time, we wanted to offer a value package system with the Xbox 360 that gave what we believe every next generational gamer is looking for, the ability have storage, to have videos, music, to have photos, great games in minimum 720p, and the ability to use wireless technology, everything we've shown in all the demos we shown you, and everything costs money. But the ability to have a hard-drive alone costs $100. So we really think the consumer will recognize the value and step up. But there are some people who just don't want to do that. They may upgrade later on, and that is what the core system is all about.
IGN: Do you think that gamers will by more of one SKU that the other? Do you have research that proves the higher price point is going to take off?
Peter: My firm belief, and in all of the discussions I've had in the last couple days with the analysts who are starting to look at this and tear this thing apart, is that the great majority of sales will be at $399. That is huge value for the money. We absolutely project that the Xbox 360 will outsell the Core System in the early going. Over the life cycle that balance will probably change, but for $399, it's phenomenal value.