I had an interesting e-mail exchange today with a vice president of Edelman, the PR firm representing Microsoft’s Xbox business.
Ken Birge took exception to the way I compared the price of Nintendo’s Wii console with the Xbox 360 in my column last week.
I said the $250 cost of a Wii — which includes a game and wireless services — is about half that of a comparable 360 setup.
Ken noted that the Xbox 360 core system — the entry-level model without a hard drive — is $299. He also pointed out that the standard 360 — which costs $399 — has more features than the Wii.
“Even if trying to say the Wii is equivalent to the base Xbox 360 at $399.00, this statement would not be fair, especially considering the additional hard drive and lack of high definition game play, etc.” he wrote.
I agree that the 360 is a relatively good deal, especially the core system. But I think buyers will end up spending around $500 to get started with the Xbox, after the cost of things like online service and a game are added up.
As a holiday gift, you’d only have to buy a $250 Wii since everything you need is in the box. A $299 Xbox console would be a nice gift as well, but the recipient would have to buy a game before he or she could play, and other stuff to play online.
In my response to Ken, I said I came at the Wii from the perspective of someone who might buy one system or another, wondering how much it would cost them to really get started.
Here’s the paragraph in question in the column:
“But the biggest selling point may be the price. It costs $250, with the sports game included, and free online services. That’s about half the cost of an equivalent Xbox 360 or PS3 setup.”
Here’s how I explained my thinking to Ken:
The core system is closer in price, but I think the $399 standard 360 is a better comparison. That model is presented to consumers as the standard Xbox, not a stripped-down one. It also comes with a wireless controller, like the Wii, whereas the core Xbox only comes with a wired controller.
The Wii also has built-in Wi-Fi for connecting to a home network. That’s a $100 extra on either Xbox.
A standard Xbox 360 console is $399. Add a game for $50, a year of online service for $50 to $60 and a $100 Wifi adapter = more than 2x the cost of a Wii.
A comparable core Xbox 360 setup would be: A $299 console plus a $50 game, $50 to $60 Live subscription, $100 Wi-Fi adapter and $50 wireless controller = still more than 2x the cost of a Wii.
That’s just counting one year of Live service. If you give the console a three-year life, then the services cost would be $150 to $180 vs. zero on the Wii.
But there are other things to consider. If you have invested in a high-def television, you might want a console that makes the most of its quality. The Wii doesn’t have high-def output like the 360.
Unlike the Wii, the 360 can also play DVD movies and stream content from a Windows PC over a home network. Those things will make the 360 a better value to some people.
I’ll bet the Wii will pressure Microsoft to start bundling a game with the core 360. A game may not be in the box, but Microsoft could make deals behind the scenes with retailers so that sub-$300 Xbox bundles appear on shelves when the Wii goes on sale next month.
Ken didn’t bring this up, but the real injustice I did to Xbox was lumping its price together with that of Sony’s $500 to $600 PS3.
It’s even harder to compare the 360 and PS3 prices, since the PS3 has a next-generation optical drive and it’s bundle pricing isn’t clear yet. Sony is also selling the PS3 at lower prices in Japan.
Clearly we’ll be talking more about console prices as the Wii and PS3 go on sale next month.
I’d also like to hear what others think about the value of the various systems.