Microsoft Would Be Mad to Go Ultimate Update

by Patrick Steen on January 6, 2008 at 10:41 pm

Multiple sku’s, what can we lose? This appears to be the motto of Microsoft and Sony this generation. With rumours that Microsoft are once again going to change things up with an “Ultimate” console to further compete with Sony, this would both confuse consumers, and dig themselves a mighty HD-DVD hole.

A rumour hit last week suggesting that Microsoft had another Xbox 360 sku on the way; an Ultimate Xbox 360.

With a scheduled release of Fall ‘08, the Ultimate will come packed with a 320GB harddrive, full 1080p support through HDMI, hi-def audio, built-in wi-fi, and perhaps most importantly: a delicious 65nm chip and a cooler, quieter fan.

What’s strange about this is that this is the Xbox 360 Elite with a bigger hard drive and built in wi-fi. The smaller chip and quieter fan should naturally make their way into Xbox 360’s as time goes on, since console manufactures continue to improve their console in private - adding reliability and reducing cost, not adding specs.

Thus, in my eyes, the Ultimate would be a useless console. Instead, just release the 320GB Hard Drive add-on and be done with it. Yes a built in wi-fi would be nice, but just add it as standard in the Elite sku. Why they didn’t do so in the first place is confusing, when their online capabilities are one of the consoles strong points.

Creating a new console sku with insignificant features would be both confusing and damaging. Confusing consumers with yet another sku could make them stray to the competition, and buyers remorse would be felt in recent Elite purchasers

Furthermore, if you’re adding specs, you’re going to increase the price. This new Ultimate 360 will only be successful if it comes in at the same price as the Elite, so as to save the Xbox 360 price advantage over the Playstation 3. This outcome enforces the conclusion that these features should just be added to the Elite, instead of producing the “Ultimate”.

But wait. Isn’t “Ultimate” just a name created by Stuff.tv who originally reported the upgrade? If so, then isn’t putting these features into the Elite the very same thing as releasing a higher spec sku? That as it may be, the point I am trying to make is that the price should be the same after the addition, and should not be percieved as something completely new.

What’s more worrying in the rumour is that it will include a built-in HD-DVD player:

To top off this already ultimate Ultimate, they’re throwing in a fully integrated HD-DVD drive.

This would be a grave mistake. Such a move would send out mixed messages. Didn’t Microsoft always say that unlike Sony they wanted its customers to have a choice, thus providing an HD-DVD player as an optional add-on.

A built in HD-DVD drive would just look as though they were unsuccessfully trying to trump Sony. The reason the inbuilt Blu-ray player is a perceived success for the Playstation 3, is because it was inbuilt from the beginning. It’s a standard and can even be used by PS3 game developers. This would not be the case with the new Ultimate, where DVD would have to remain the standard for game development.

Moreover, the price of an inbuilt HD-DVD drive would be extortionate. These drives are expensive. As much as $200 on the PS3’s release, Sony was losing a hell of a lot of money. Though the price has gone down considerably, if Microsoft were to make any profit out of this new sku, they’d have to price the Ultimate even higher than the Playstation 3.

More importantly, an end to the format war is beginning to transpire. Microsoft would be wise to wait until the war was over before they introduce any HD drive in their console. By such a time, it might be better to wait until their next console.

Plus, what kind of image would the Xbox 360 have with a dying format inside? It would start to look like a piece of useless kit, just like the HD-DVD players surrounding it. This is very much the problem the Playstation 3 faces, but with movie studios beginning to back Blu-ray, Sony might have just gotten themselves out of a sticky situation.

Thankfully Microsoft have put this built-in HD-DVD rumour to rest:

Microsoft does not comment on rumors or speculation.

Ironically Microsoft then go on to comment on the rumour. Or is their comment a sign that an inbuilt HD-DVD is not in fact a rumour? Hmm.

We have reiterated multiple times since launching the Xbox 360 HD-DVD Player that we have no plans to integrate an HD-DVD player in to the Xbox 360.

We feel that offering the drive externally is the best way to give consumers the ultimate choice to create their own high-definition experiences.

In conclusion, Microsoft would be mad to go Ultimate. With repercussions threatening to confuse, anger and scare the consumer, Microsoft could weaken their position in this console generation.

Sony is just as guilty in this multiple sku age and yet both companies fail to see that the console outselling them both is the HD-less, uni-sku’ed Wii.

Whether Microsoft are announcing an Ultimate console is likely to be revealed within the next few hours as their conference at CES begins.

*Update* Microsoft and Bill didn’t announce an Xbox 360 Ultimate in their CES keynote. Thus, either they are holding back, or it was a false rumour in the first place.

Xboxer.tv question whether the Xbox 360 Ultimate was canceled after Warner decided to go Blu. Even hypothesising that an HD-DVD enabled Xbox 360 was some kind of insentive for Fox and Warner to exclusively support HD-DVD, only to be cancelled when this deal fell through.

Microsoft have always been good at business decisions, and this time they made the right one once again.

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