Chris Lanier's Blog

Previous coverage: Here, Here,  Here,  Here,  Here, and Here.

Latest rumor, ASUS subsidiary Pegatron has reportedly won the contract to “assemble the Xbox 360 with Blu-ray Disc ROM drive” according to Economic Daily News (Chinese).

I’ve covered the Xbox 360 Blu-ray rumors since they started, and I think I’ve made my case pretty clear.  In my opinion it doesn’t make sense for Microsoft to include Blu-ray in the Xbox 360.  It doesn’t make sense for Microsoft to even offer an external Blu-ray drive.  If doesn’t even really make sense to do a single new SKU for Blu-ray, but lets look at it from another angle.  Forget the technical aspect, forget what Microsoft wants or doesn’t want, let’s look at it from the consumer aspect and from Microsoft's price perspective.

External Blu-ray Scenarios

(I’m blindly assuming that Microsoft would sell an external Blu-ray Disc drive for $150, which would most likely be a loss for Microsoft.  Remember that HD DVD originally shipped for $200 with Toshiba taking the huge loss.  Other HD DVD drives where shipping for $300+ at the time.  This only takes into account drive prices, loss on the software/licensing side not included.)

• Playstation 3 40GB (include Blu-ray) = $400
• Playstation 3 80GB (includes Blu-ray) = $500
• Xbox 360 Arcade ($280) + External Blu-ray Disc Drive ($150) = $430
  
• Xbox 360 Premium 20GB ($350) + External Blu-ray Disc Drive ($150) = $500
• Xbox 360 Elite 120GB ($450) + External Blu-ray Disc Drive ($150) = $600

Once again, the Xbox 360 Arcade is targeted at casual gamers, so I’m going to leave it out of the picture (but note the total price is still more than a PS3).  I’d also remind everyone that specs are the only thing that matters.  Everyone keeps telling me Microsoft needs Blu-ray to compete with the PS3.  Unless you’re matching the basic specs, you’re not competing.

This means you can get a PS3 with double the hard drive space for $100 cheaper.  Point goes to the PS3 if you are talking about competing.  You don’t gain anything by offering an external Blu-ray Disc drive, the PS3 is still a better deal all around.

For current Xbox 360 owners the concept of an external Blu-ray Disc drive is the most appealing.  Even at $200 it would be the cheapest Blu-ray Disc Player on the market, but why exactly does Microsoft care about this situation?  It doesn’t boost Xbox 360 sales, and they are most likely losing money on the drive to start with.  I understand why current owners would be interested, but it just doesn’t benefit Microsoft at all.

Internal Blu-ray Scenarios 

Considering the Xbox 360 Arcade is again targeted to casual gamers, the chance of Microsoft integrating Blu-ray into it doesn’t exist.  UNO and Pac-Man players generally are not Blu-ray owners.

Microsoft already needs to upgrade the Premium to a larger hard drive to directly compete with the PS3 at its 40GB entry price.  Put a Blu-ray Disc drive in the current 20GB, sell it at a loss for $350 and the PS3 is still a better deal on paper.  Point goes to the PS3.

Upgrade the Xbox 360 to at least 40GB and add internal Blu-ray (selling at a loss again) and the Xbox 360 would finally be able to compete directly.  So far this is the only feasible option from a consumer perspective, of course that replies on Microsoft taking the hit for Blu-ray and upgrading the hard drive at the same time.  If Microsoft ups the price (figuring 40GB and Blu-ray) your price would be equal to the 40GB PS3 (and I’ve covered reasons why the PS3 is a better Blu-ray Disc Player to start with).

The Xbox 360 Elite is supposed to be Elite, right?  Is Microsoft going to alienate all Xbox 360 Elite owners by doing another SKU that is truly the Elite one?  The one advantage the Elite has is the large hard drive, but once you cross the $500 price tag your product isn’t going to push any units.  This would mean Microsoft takes the hit for the Blu-ray Disc drive and doesn’t pass any on the consumer.  Not likely.

Exclusive Titles

None of the above takes into account people buying either the PS3 or Xbox 360 for exclusive titles.  These people are going to get whichever system has their exclusive titles, matched features might sway them one way, but if Halo is your game then you are buying the Xbox 360 no matter what.  If Grand Turismo is your game, your buying the PS3 no matter what.

Previous HD DVD Owners

A larger percent of the 300,000 people who purchase the external HD DVD drive still have a bad taste in their mouth.  This might be eased by Blu-ray officially being the winner, but Xbox 360 Premium ($350) + Xbox HD DVD ($200) + External Xbox Blu-ray ($150) + Accessories = $700+ for a game console that is three years old (earliest release of such a drive would be years end, console turnover time has been around four years).

Growing User Awareness Against Xbox 360 with Blu-ray

The best part of all of these rumors is growing user awareness that the Xbox 360 with Blu-ray doesn’t make sense.  Check out the comments on Engadget and Engadget HD, the vast majority of the comments (especially the ones ranked high) are going against buying, needing, or wanting an Xbox 360 with Blu-ray.  Once again, I just don’t see how this would make any sense.

Console Redesigns

One of the newest ideas that has been thrown out is Microsoft including Blu-ray in the Xbox 360 when they really start the console redesign process to cut costs in manufacturing.  I can see this happening if they are planning Blu-ray for the Xbox 720, but if they are not then I don't see why they would waste the time.  As Blu-ray drives fall in price, they will become the standard.  I don't think we are there just yet, but in another year or so the prices will be around of that OEM DVD drives today.  If Microsoft is doing Blu-ray for the Xbox 720, you might as well throw it into the redeisgned Xbox 360 as well (unless they hold out and use Blu-ray as a feature to sell Xbox 720).  At current prices this story is much different.

Update: Microsoft: “No Plans to Introduce a Blu-ray Drive for Xbox 360” (5/5/08)