Did This Convo Just Reveal How Much Cheaper Series X Will Be?

While we are still waiting to find out how much the Xbox Series X and PlayStation 5 are going to cost, there are plenty of theories on the matter. One of the more intriguing ones in recent memory comes from financial analyst Michael Pachter. In a recent podcast appearance, Pachter discussed the upcoming console launches with former Microsoft executive Peter Moore. In the discussion, Pachter seemed to believe that Microsoft was planning to undercut the price of Sony's PlayStation 5 console whenever is it officially announced.

Forbes' Paul Tassi has debated the merits of this theory, pointing specifically to a quote from Pachter's podcast appearance: "Microsoft's being pretty smart about waiting Sony out here. From what I've seen, Sony's going to have to charge $500 for their PS5, and Microsoft has a big balance sheet – if they want to cut the price by $100, just price below and subsidize the first ten million, they will."

This is an interesting theory, as it basically assumes Microsoft will base its entire Xbox Series X marketing plan on spiting Sony. The idea here is that Microsoft could afford to take a loss on the first batch of Series X consoles. If this proves to be true, it could very well work. Sony is already in a tight spot when it comes to the PlayStation 5.

Earlier this year, we learned that the PlayStation 5 is proving to be quite costly for Sony to produce. This is due to a number of reasons, including the scarcity of materials. The DRAM and NAND flash memory used in the new console are also extensively utilized by the smart phone industry, which means that Sony is having to share the same pool of parts. Even the cooling board used in the PS5 is supposedly more expensive than normal, costing a few dollars more than the standard. It all adds up to a system that will likely be very impressive, but also cost prohibitive for both the consumer and the company making it. The current estimate is that it costs around $470 for Sony to produce each individual PS5, meaning the company would have to charge around $500 per console to break even. This is also why the PlayStation 5 will likely be released in limited quantities at launch. 

This is why it has been presumed that both companies have been keeping an eye on one another's marketing rollout. For instance, Microsoft released a new look at its Series X controller mere days after Sony released the first look at the PS5's DualSense controller. In much the same way, it has been presumed that both companies are waiting for the other to budge when it comes to announcing a price point for the next generation.

Recently, Xbox boss Phil Spencer informed fans that there was no Plan B when it came to Microsoft's plans to release the Xbox Series X. This would seem to suggest that everything in regards to the console's release is more or less set in stone. For instance, Spencer explained, "We have nothing right now that says we're not going to make the dates that we've been planning." This meant that the console was still on track for a holiday season release this year. 

If that is the case, then it seems very likely that Microsoft has a good idea about some of the broader details of the release strategy, including a possible price point. Still, there is some thing intriguing about the idea that Microsoft could be planning a very public undercutting of Sony's PS5 price. It would be a bold move that would get everyone talking, to be sure.

However, as Tassi goes on to point out, there is another looming reason as to why Microsoft could be planning to make such a drastic price cut. Unlike the first scenario, this reason has far less to do with purely beating out the competition. Tassi makes a case for the idea that Microsoft could release the Xbox Series X at a lower price as a way of keeping the consumer in mind during a trying time.

It goes without saying that the COVID-19 pandemic has caused a period of economic uncertainty. Not only has the video game industry been impacted by the coronavirus, but it has had to adapt. With that in mind, it's probably a rather tricky proposition to release a $500+ console at the point in time.

Ultimately, Tassi concludes that it's not terribly likely that the Xbox Series X will be released at such a relatively low price. However, the theories as to why Microsoft would consider those price points are certainly compelling. As always, we'll just have to wait and see here.

Next month, Official PlayStation Magazine is supposedly doing a big reveal regarding the PlayStation 5. Maybe we'll get a price point for that system at that time. If Microsoft still hasn't announced the Series X's price point by then, this is when we will see if Pachter's theory was correct.