Microsoft may play a masterstroke with Xbox Series X and Undercut Sony’s PS5 Price by $100!

By Wajeeh Uddin 17 May, 20

The dawn of a new gaming console generation is upon us all, and both Sony and Microsoft are hoping to come out of the gate with strong sales despite the global recession due to the COVID-19.
 However, the real news comes here where multiple reports claim that Sony is facing trouble keeping the PlayStation 5’s price down, where Microsoft is getting its limelight for devising a strategy to take advantage of this. Many experts are suggesting that Microsoft is waiting for SONY to announce the PS5’S price and then strike the gaming industry with a heavy blow by giving the Microsoft Xbox Series X a price undercut worthy of around a $100. 

Source: T3

Wedbush Securities analyst Michael Pachter and former EA and Microsoft executive Peter Moore appeared on a podcast recently to discuss the game industry. The pair mentioned about how the console launch strategy with particular emphasis on hardware costing is what Microsoft is focusing on. Neither Microsoft nor Sony have talked about pricing. Still, many reports claim that the SONY PS5 has the highest manufacturing cost so far from all previous console of the PlayStation family and has reached around $450 apiece which might see the PS5 to have a release price of about $500 or even $550 which is a little too out of the majority’s grasp.

Source: VGChartz

If we talk about hardware specifications, then both the Xbox Series X and the PlayStation 5 will rely on an eight-core, 16-thread AMD processor and an RDNA 2 GPU. However, Sony’s implementation is a bit different from support for flexible clock speeds and Adaptive Voltage and Frequency Scaling that sends unused power from the CPU to GPU. It also has a faster custom storage platform. Some reports suggest that Sony is looking at around $470 to manufacture each console, so much that it has allegedly opted to scale back the number of units it plans to manufacture for launch. This is a counterintuitive strategy that might work in favor of Sony as they would launch and sell only limited devices in its stage 1 of sales at a compromised price which would ensure a reasonable number of sales without giving significant loss to Sony and ultimately boost the sales for a higher price of the PS5 in stage 2 of sales.

Sony has been winning the console wars for generations and it really is not interested in giving up the throne now when its PS5 is packed with amazing features and hardware boost. It’s not unusual for companies to make little to no money on game console hardware when new generations launch — it’s more about getting people locked into a platform and get them to commit to the console and then for the next five years or so they’ll buy games, controllers, and online services which would make it more cost-effective and the returns will be more. 

Pachter noted that Sony looks to be targeting $500 for a launch price which suits the company the most, but Microsoft has more cash on hand due to it having multiple services offered to customers than just the Xbox and so Microsoft could afford to lose money on the first 10 million units with a launch price of $400. 

So, Microsoft might be ready with a price to shock everyone, but it’s waiting on Sony to announce that $500 price tag. Then, as planned, Microsoft will very publicly undercut Sony by as much as $100, and a $400 price tag will make the Xbox Series X a much more lucrative purchase this holiday season, and that would ultimately give Microsoft a significant advantage going into this new console era.