Monday, March 1, 2010

PS3 vs Xbox 360 - the quality wars

Just realized today why there may be a huge difference in quality between the Xbox 360 and the PS3... until recently Sony was losing hundreds of dollars on each PS3 sold, while Microsoft was actually making money (about $80) per console. Of course Sony's plan is to make that back in Blu-Ray and game sales.

So think about how the incentives line up: Sony really needs the PS3 to be relatively reliable, because the last thing they want is for people to run out and buy replacements once a year - that makes it even harder for them to break even. (not to mention that it might anger customers).

On the other hand, Microsoft doesn't really care about the Red Ring of Death, since they'll make money off of the replacement box as well.

The sad news for PS3 owners - now that Sony has a newer model, they're probably losing less money - maybe even making money by now. Which means they'll have a reduced incentive toward quality. Once a console is successful, owners will be invested in the platform... if you own $1000 in games you really have no choice but to plonk down for another box.

Note: I'm deliberately ignoring the issue with the lasers going bad, I gather this is something that even Sony couldn't really do anything about. The early Blu-ray lasers just don't last very long.


  1. But aren't you also ignoring the fact that the profit curve moved inversely to the reliability of the Xbox 360? The early versions were the least reliable, and the whole RRoD debacle started while MS was taking a loss on the console (I think they needed to attach 3-5 games to go cash-positive when it first came out).

    Microsoft is, in fact, making the most reliable revisions of the Xbox 360 right now than ever before in its lifetime. They've become more selective with the DVD drives, they've re-tooled to use a 65nm processor that takes less power and generates less heat, and they've revamped the heat sinks and air flow.

    I think you're ignoring the competitive landscape as well. If both Microsoft and Sony don't continue to give a good, stable experience with their hardware, people will defect. Some brand loyalty and fanboy-ism will prevent that, but MS has unwittingly stacked the deck against themselves for their next-gen console by creating the perception that MS hardware breaks often. Lots of people will balk unless MS comes up with some compelling features.

  2. I didn't realize the xbox 360 started life as a loss leader. BTW, is it now safe to actually buy one?

    According to this, Sony is still losing money on the ps3 slim:

    I would hope that when making revisions to an existing piece of hardware, that both companies would try to 'ratchet' it into better shape.

  3. Hmmm.. I wonder how one posts a link in a comment. I'm such a noob.

  4. Every console for the last decade or so has been a loss maker at release time. I think the trend goes all the way back to the original Playstation. It essentially started when various companies realized they could make the money back fairly easily on software as the home gaming market grew to a point that it was considered stable instead of a fad.

    The only exception has been the Wii, which was priced to make money at its release date. They managed that by not really advancing the core hardware very far beyond the GameCube.

    Last time I checked (probably a year ago) the Microsoft games division is still underwater on this cycle of hardware. Extending the replacement warranty to 3 years and all the redesigns they did cost them dearly, but they had to do it to save face and protect the brand's reputation.

    I'd have no problem buying one today. Pretty much all the hardware out there is the new 65nm processor design. Back a few years ago you'd have to dig through the pile in Best Buy looking for the ones that were UL rated for 175 watts instead of the 208 watt versions. That was the easiest way to tell the difference between the processor revisions without opening the box.

    I have both a PS3 Slim and an Xbox 360. The Xbox gets *far* more use. The on-line match making, services, and store are embarrassingly better than the PSN. Sony should be ashamed. NetFlix on the Xbox is fantastic (and doesn't require a damn disc). And I stream movies to it from my Mac using ushare.

  5. I'd forgotten about the Wii. Ours died within the first year, completely bricked. After going without for a year or so, the kids eventually whined and cajoled us into getting a new one.