In short...Microsoft fell into the same trap Sony did 8 years ago and their overconfidence and ego got the best of them.
Consider this:
After the success of the PS2 when Sony was in the lead and XBOX a distant 2nd, Sony announced their PS3 would sell for a massive price of $600!!!! When questioned about why so much, Sony said people will pay it. Microsoft saw that as a chance to pounce and priced their system lower and came out a year sooner. This resulted in a huge win for XBOX and allowed them to secure 1st in 'next generation' consoles (no I'm not counting Wii in this scenario although I know Wii sold more).
Fast forward to years later and you have Microsoft that comes to the main stage, announces a $500 system requiring a Kinect purchase, the inability to share games (at the time), an online all the time system that eliminates the need for disc games after install. When questioned about the price and gaming strategy, Microsoft said the same exact thing Sony did. They claimed people will buy their systems and they leaned on the strength of their name brand to carry them through.
What did Sony do? Exactly what Microsoft did the last console release. The system came out $100 cheaper and they didn't have mandatory features that Microsoft eventually backpedaled out of. They also positioned themselves in these exclusives so they could gain the ground they lost from the previous generation. That's why you saw $350 XBOX Ones on the shelves this Christmas. Damage control.
These companies sometimes get too arrogant in their branding and they assume too much of the consumer. You'd think they would learn from each other.
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PS3 was more expensive, but also had extra features for that expense, like bluray for one. Wifi I think was another. Free Psn. Etc. At the time of release, if they were features you wanted, it was actually cheaper to buy a PS3, compared to a 360 with the equivalent addons. 360 also affectively held back the growth of games by using DVDs, as multiplatform games were inevitably made for dvd. I don't think it was completely Sony thinking people will pay more for the name, it was a better media system out of the box too.
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PS3 had blu ray going for them but $600 was serious money to drop on a console. The thing 360 allowed was customization over time and a price point that was more reasonable. People were going to pay $600 for a computer first before buying a gaming machine. Money talks and the consumer wants value and quality. XBOX 360 catered to both of them which allowed them to take the lead and never look back. In terms of which was the better machine, for ME it was PS3. I had a 360 but after a red ring and only finding FPS on the system I stayed with PS3. Not bashing the 360 but it didn't cater to my interests as a gamer. Don't forget, XBOX actually was pushing for HD-DVD (remember that medium, ha!). That flopped in a hurry.
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what? Companies learn from consumer feed back through sales.... better stop that talk in public or people in white suites are gonna get you
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Wow a sensible reply. thankyou, and you hit the nail on the head with that one. Both companies are guilty of overconfidence most of the time
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Great post. Seriously.