Microsoft: $500 Xbox One is a "very good deal"

Yusuf Mehdi says price point is strong value for what system is offering, believes Xbox One is "unique" relative to competition.

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The Xbox One's $500 price point represents a "very good deal" for consumers based on the system's capabilities, according to Microsoft Corporate Vice President Yusuf Mehdi.

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"In this version, we made a couple of big bets," Mehdi said this week during the Citi Global Technology Conference. "We said that there are a lot of low end simple casual game boxes. We wanted to have something to really differentiate and lets you plays games as if you're playing movies. We wanted to bring that."

Mehdi explained that Microsoft also wanted to "break the barrier" of being able to control a television set fully with voice and gesture commands through Kinect. To do this, Microsoft "added a lot of capability," he said.

"And so the view we feel is that for our $499, our price point, we think the value that we provide for that is a very good deal," Mehdi said. "Obviously, different people will kind of make their choices, but we feel that we’ve done the right balance."

Former Xbox boss Don Mattrick previously said Microsoft was "over-delivering" on value with the Xbox One.

The Xbox One's $500 price point is $100 more than the Xbox 360 sold for at launch in 2005. Mehdi said when adjusted for price inflation, however, "it's actually pretty comparable."

Also during the presentation, Mehdi discussed how the Xbox One is tracking ahead of launch in November. He said the system has been sold out on preorders for "several weeks" now and that Microsoft is on track to have the largest console launch with the Xbox One by a "wide margin."

Mehdi did not give any specific sell-through predictions for the Xbox One, but said he expects there to be "multiple millions of people" playing the new system this holiday and "tens of millions" of buyers in the first year.

"So feeling pretty good about progress; still a lot to do, but we're feeling pretty good about it," Mehdi said.

Mehdi also talked up the gaming industry overall, saying gaming is the "fastest growing segment in all of entertainment" in terms of hours used and dollars spent. He said the gaming market is expected to grow in the upcoming console generation.

The Xbox One will help to grow this audience, Mehdi said, because it is "pretty unique" relative to the competition, as it's an "all-in-one" console that plays games and offers live TV.

The Xbox One launches in November. Mehdi said supply constraints are expected at launch.

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