Subsidized Xbox Bundle vs. Outright Purchase, The Math

Earlier today news broke that Microsoft is planning to come up with a subsidized model for the Xbox 360. If Tom Warren reporting for The Verge is right, you will be able to pick up a 4GB Xbox 360 and Kinect just for priced it at $99 in a 2 year contract. A genius strategy since It’s the price of a Roku box and of an Apple TV.

The Xbox 360 is the leading gaming console in the market. It has been consistently selling more units than Sony’s PlayStation 3. There is no reason for anyone to buy an Apple TV. The device from Apple has failed miserably for the company despite being in the business for a while. Xbox 360 on the other hand has lined up several services including a deal with Comcast. Here’s what Microsoft’s plans are:

  • $99 Xbox 360 & Kinect
  • 2 year contract for $15 a month
  • Xbox LIVE Gold subscription & some other services included in the $15

It is the last part that will turn out to be the factor why this deal will be worth it and why this model will succeed. However here’s some Math:

The subsidized Xbox 360 bundle: 99+(15*24)=$450

Standalone: 199+149+(59*2)=$466 (Xbox 360, Kinect, Xbox LIVE Gold for 2 years)

4GB Xbox 360 & Kinect bundle: 300+(59*2)=$418

On Amazon: 280+(49*2)=$378 (bundle for $280 & Xbox LIVE Gold 1 year subscription for $48)

So the Math says buying the bundle with Xbox LIVE subscription on Amazon you get a better value. However, as @karelj and @theromit point out, the subsidized model with a small monthly payment will attract a lot of people, the $99 upfront cost will be very enticing to many. A while back I suggested that Microsoft’s motto of a desktop on every desk has now evolved into an Xbox in every living room. At $99, it’ll happen.

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Manan Kakkar

Manan is a technology enthusiast keenly following the consumer products from Microsoft, Google & Apple.