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The Register: MS plans subsidised X-Box street price, $500m promo blitz

Jul 28, 2000, 14:18 (8 Talkback[s])
(Other stories by John Lettice)

"Microsoft will subsidise the street price of its X-Box games platform, due out next year, and is planning to spend $500 million in total on making the machine a success. The $500 million will cover subsidies, marketing and support to retailers and software developers, and will make X-Box Microsoft's biggest launch ever - according to Microsoft, that is."

"...the user subsidy is interesting. This admission seems to have been a Ballmer blurt at the analysts' meeting, and while it's not an unexpected development, it's worth kicking around a tad. Game console makers generally do subsidise the hardware, just like the mobile phone companies and the cable companies, in the expectation they'll make their money out of software. Microsoft has clearly been moving in this direction (e.g. with the Web Companion, which we're sure will be subsidised, like its rival from AOL), and anyway it would have to do it in order to compete with Nintendo, Sega and Sony on hardware prices."

"So if Microsoft went for a serious subsidy, the street price would be 'pretty cheap PC minus X,' where X is the subsidy level. This alone might not be enough to take out Sony, but we have here another blurt. Games division senior VP Robbie Bach reveals that it'll link into WebTV and MSN services, and while this is again logical beyond the point of obvious, it gives Microsoft a potentially huge advantage."

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