Consumer's Guide to the XBOX 360
Free Market Lessons from Microsoft's Video Game Console
Microsoft knows how to make money. This article explains what the XBOX 360 can teach consumers about money, capitalism, and supply and demand.
Microsoft knows how to make money. Its strategy surrounding the XBOX 360 should make that clear to every consumer. With the XBOX 360, Microsoft has provided consumers with a variety of options -- all of them pricy in their own right and all designed to get you to spend more money. What lessons should consumers take from Microsoft, the XBOX 360, and the video game console wars?
Lesson #1: Microsoft Wants Your Money - Continually
The traditional model of American manufacturing is that a company identifies a demand in the marketplace and then makes a product to meet that demand.
The Microsoft model is that it identifies a demand in the marketplace, and then positions itself to be the ongoing (and, if possible, exclusive) supplier of that demand. In this model, Microsoft doesn't just take your money, give you a product, and walk away. On the contrary, Microsoft lures you into an ongoing relationship, whereby you continue to purchase products and services that it provides. It is a strategy that monopolies are built upon, and it's one that has made Bill Gates one of the richest men in the history of the planet.
This model or philosophy drives Microsoft's strategy with all of its products and services, including video gaming.
Lesson #2: Create the Relationship Any Way You Can
Even though the Microsoft XBOX 360 comes with a hefty price tag, Microsoft has experimented with different options to bring money-conscious or financially-strapped consumers into its web. The profit isn't really in the video game console. Rather, the profit is in the ongoing relationship. Accordingly, Microsoft wants to get as many XBOX 360 units into the hands of consumers as it possibly can.
As of the writing of this article, there are three options to choose from:
- XBOX 360 Arcade ($279.99) - designed to give you "everything you need to hit the ground running" (or, so says Microsoft). In truth, it's designed to lure cash-strapped consumers into the XBOX 360 world for a low entry price - and get them emotionally determined to upgrade as soon as possible!
- XBOX 360 ($349.99) - the basic, standard unit
- XBOX 360 Elite ($449.99) - the system of choice for video game enthusiasts
Lesson #3: The Money's in the Upsell
Microsoft doesn't make its money on the sale of XBOX 360 units. In fact, if it could afford to do so, Microsoft would probably give the units away. The money is in the games and accessories. Why do you think they only sell the unit with one controller?
It's in the games and accessories where consumers need to be practical and wise.
Bottom Line: Learn from Microsoft and Look for Cost Savings
As an American-based company, Microsoft operates from a free market mindset. In the opinion of this author, there is nothing wrong with that. Consumers should expect Microsoft to want to take as much money from them as they (the consumers) are willing to spend.
That said, consumers should do their homework. How many accessories do you really need? How much memory do you really need? Realistically, how much playing time will you be investing in the XBOX 360?
These questions, along with putting the word out to friends and family members (for games, accessories they no longer need and/or are willing to share) and keeping an eye out at flea markets, discount game stores, and on eBay, should help you keep a little more of your hard-earned money.
