In Xbox One Price War with Sony PS4, Both Companies Could Lose Money

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By Douglas A. McIntyre Updated Published
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In the fight for market share in the game console business, the key ingredient to success may be what it costs to make and market Microsoft Corp.’s (NASDAQ: MSFT) Xbox One and Sony Corp.’s (NYSE: SNE) PS4. And the winner may not win at all. Experts in the industry often remark that the move of gaming to tablets and smartphones eventually may completely eclipse the traditional game industry.

According to Reuters:

Sony Corp on Monday priced its latest PlayStation 4 console $100 lower than the new Xbox One by rival Microsoft Corp as competition for gamers’ pockets intensifies ahead of the year-end holidays and gift-giving season.

Sony said it would sell the latest PlayStation model for $399 late in the year shortly after Microsoft announced a $499 price tag for its first new Xbox in eight years and said it would go on sale in the United States in November.

None of the traditional sources like iSuppli has offered a “virtual teardown” of either console.

If the cost to build either console is much above $400, Sony and Microsoft will be fighting for market share, and perhaps some level of revenue from the games that play on the boxes. However, that is not much of a future since the price pressure on consoles is general down as they age. Probably, the same is true as competition from outside the console market gains.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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