Xbox One's Steep Price Tag Could Derail Microsoft's Planned Holiday Sales

Xbox One's Steep Price Tag Could Derail Microsoft's Planned Holiday Sales

In a new Bloomberg TV segment, The Art of Pricing author Rafi Mohammed believes Microsoft has fumbled a "simple issue" by over-pricing its next-gen system for the holidays.

"You want to get that console in consumers' hands, and then where you really make the money is off of the games," Mohammed said. "So it was really surprising that they charged such a premium, especially when they had a lot of negatives…like the very restrictive DRM, which they did retract from."

"One of the key things is that they really listened to their consumers and they did backtrack and they reduced the price, but I still think the price is too high," he added. "So it's still a $100 premium."

Mohammed, who has spent 21 years working on pricing issues, says the inclusion of the Kinect 2.0 sensor with the Xbox One, is a mistake. It's passing on to consumers an inflated price. Sony's new PlayStation 4 will be priced at $400 and have its motion sensor as an optional $60 accessory.

Microsoft's Don Mattrick defendend the Xbox One pricing during E3, saying that it was "over-delivering value" and that $500 is not a ridiculous price compared to other consumer technology today.

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Tags: microsoft, microsoft-xbox-one, holiday-2013
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