Natal less than $50?

Interesting this. Michael Pachter reckons that the Microsoft Natal add on for Xbox 360 will retail at under $50. You can see how this might be not far from what happens:

  • The cheaper it is the more they will sell, this is called price elasticity of demand. Microsoft need to sell lots to get the installed base over critical mass. Really they need every 360 owner to buy a Natal.
  • They have to take on Wii in the living rooms of the world and Wii comes with a gesture interface as standard. So 360+Natal needs to be price competitive with Wii.
  • They can easily sell Natal at a loss, they will get their money back very quickly from what they will make on Natal games. This is, after all, part of the traditional console pricing model.
  • Natal is vastly technically superior to the Sony and Nintendo gesture interfaces, if they get a large enough installed base they could be on to a must have technical and social phenomenon. Then 360+Natal would snowball.

Of course this is the opposite of the normal high tech pricing model where you fleece the early adopters to pay for the R&D and only go mass market when you have covered your investment and screwed your manufacturing costs down.

Consoles use this early adopter model combined with the razor blade/ inkjet printer model where the games subsidise the consoles. So Microsoft have good experience with sophisticated pricing strategies.


  1. All peripherals that are not thrown in with your original purchase fail.

    It needs to be cheap for those who don’t have it and bundled with future console sales

  2. Steve: Wii Fit?

    Bruce: But is it “vastly technically superior” in ways that have any relevance to the type of games that sell well on the 360?

    Wii Fit is the model they’re trying to replicate here. I expect it’ll be ~$100 with a bundled game. (Which, if they’re being really blatant, will be a collection of minigames developed by Rare.)

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