Confirmation: Microsoft Unveils Xbox 360 Elite

Microsoft is announcing today that it will begin selling the Xbox 360 Elite, a beefed-up black version of its game console, starting April 29. We got most of the details right in Saturday’s blog post.

The move upgrades the technology in the Xbox 360 for hardcore technology buffs and it is aimed at keeping Microsoft from losing those customers to the temptations of Sony’s PlayStation 3. I can understand why they’re doing it. But I think they’re shooting at the wrong target. They should be going after Nintendo, which is cleaning up with the lower-priced Wii. The good thing for Microsoft is they have made themselves into a moving target.

In the past, games consoles have been set in stone at the launch. Microsoft debuted the XBox 360 in November 2005 with a $399 version with a 20-gigabyte hard disk, and a $299 version without a hard disk. But Sony came out with the PS 3, which had advanced video features and a Blu-ray next-generation DVD disk player that allowed it to charge as much as $599.

With the new machine, Microsoft is breaking the rules of the console wars, which dictate
that the same machine last for five years or so. The new Xbox 360 Elite machine will have a 120-gigabyte hard disk drive so that gamers can store more media such as movies or music. It will have a high-end video connector and cable based on the HDMI (high definition multimedia interface) standard. It will sell for $479, less than Sony’s cheapest PS 3 model, which comes with a 20-gigabyte hard disk.

Microsoft will keep its other versions of the Xbox 360 at their current prices. Albert
Penello, director of global marketing for the Xbox division, said that Microsoft would not
relegate its earlier customers to second-class status. That means that any game or service that Microsoft launches will play on every version of the Xbox 360.

That limits how much game developers can exploit the advanced features of the Elite, but it also keeps the earliest customers from feeling like they have to throw away their boxes. Those who want to buy a stand-alone 120-gigabyte hard disk can do so for $179.99. That’s a relatively high price, but Penello notes that the external drive has its own power supply and it uses a small version of a hard disk meant for laptops.

Gamers will remember Sega’s doomed strategy of offering frequent upgrades to its consoles with the SegaCD, Sega Saturn, and Dreamcast. It changed its hardware so often that it frustrated both gamers and game developers. The gamers had to keep plunking down money. The developers didn’t know which platform would be stable enough for them to invest years of development time and money. Microsoft isn’t making that mistake since the previously mentioned policy of making all games run on each model will keep the platform stable. But it’s clear from the upgrade that Microsoft, which waited only four years to launch its second console, should have put better, more expensive, and longer-lasting technology into the Xbox 360 in the first place. If it had done so, there would have been little need for an Elite console to compare favorably against the PS 3. I realize this would have put Microsoft in the hole on costs, but we can all see the trade-offs here. Imagine how developers might have moved more aggressively into the massively-multiplayer online game space if Microsoft had not launched the Xbox 360 Core. To run an MMO, you need a hard drive to store the game world data. The 120-gigabyte version will be an excellent platform for that, but developers can’t know whether the installed base of 120 gigabyte machines will ever be big enough to justify a dedicated effort of making a game that will require a big hard drive.

While Sony has Blu-ray drives built into the PS 3, Microsoft chose not to include the $199 optional HD-DVD movie player in the new Xbox 360 Elite. That’s a good move as it looks like there isn’t a great deal of demand for the next-generation movie disks yet. Blu-ray is starting to pull away in sales because of the PS 3, but there is enough confusion out there so that consumers aren’t buying yet. There are combo players available from LG, and Warner Bros. is promising combo disks with both Blu-ray and HD-DVD on them. You can bet if the demand for HD-DVD was huge, Microsoft would have built it into the Elite.

Microsoft is also announcing that it will have more movies available for download on the
Xbox 360 with the addition of movies and TV shows from A&E, National Geographic Channel, and New Line Cinema. It will also have a leading distributor of Japanese Anime films. It is racing ahead to provide high-definition video which can be downloaded to the Xbox 360’s hard disk, partly to head off the appeal of Apple’s new Apple TV product, which launched for $299 last week but doesn’t enable true high-definition movies.

Penello says that the movie-downloading that Microsoft launched for the Xbox 360 in
December has become hugely popular, accounting for a 400-percent increase in downloads on Microsoft’s Xbox Live online service.

One of the most appealing uses for the Xbox 360 Elite isn’t available yet. Microsoft
announced in January that the Xbox 360 can serve as an IPTV set-top box. Phone companies such as AT&T are launching such boxes with TV services that compete with cable. As an IPTV set-top, the Xbox 360 could be used to store enough video to serve as a digital video recorder. Penello declined to say if IPTV services would be launched to take advantage of the Elite. He said that Microsoft’s partners in IPTV would determine their actual service and hardware offerings.

Microsoft hopes the Elite will blunt the appeal of the PS 3. Sony has already shot itself
in the foot by pricing its machines so high. Microsoft shouldn’t join Sony at the high-end of the price range, at least not until it justifies the price with cool services such as IPTV.

If you must have an Xbox 360 Elite, it could be tough to find them. Microsoft will start
selling them in the U.S. and Canada only at first, suggesting that they will be in short
supply at the start. By the fall, Microsoft will likely be able to sell higher volumes of
consoles with cheaper components inside them. At that point, it could be in a very good
position to cut prices and put some pressure on Sony. But as Microsoft rattles sabers with Sony, it would be wise to keep an eye on Nintendo.

In contrast to what I reported on Saturday, Penello said that the Elite is not a “limited edition.” It will be available on April 29 in the U.S. and Canada. However, that means it is not going to be built in such high quantities that it can debut on a worldwide basis. Penello would not confirm what Microsoft did to the insides of the Xbox 360, though he noted that the addition of the HDMI out port signifies a change in the motherboard.

I had heard that Microsoft changed the motherboard to reduce costs of the machine and to accommodate the Elite changes. The black finish on the Elite is the only thing different about the case, which is the same as the white Xbox 360s.

But the Elite does not yet include the cost-reduced 65-nanometer chips. That means it uses the same power-hungry chips as before, which suggests that the machine will be just as loud as current machines with their multiple fans. The 65-nm chips will lead to reduced chip sizes and, as one of our posters emphasized, lower power consumption. That would allow less expensive cooling solutions. The smaller chips could, over time, lead to lower production costs that would help Microsoft accommodate price cuts in the future.

Penello declined to say whether Microsoft would change prices anytime soon. For now, it’s keeping all the current prices. I believe that Microsoft is planning to have higher volumes of the 65-nm chips in the fall, along with more plentiful supplies of the Elite as well as other consoles.

Regarding the reduced forecast, Penello said, “We’re the fastest console to 10 million units. That’s a gigantic milestone. Regardless of numbers, PS 2 is $130. I’m not particularly worried what’s happening with the PS 2. We have no idea who they are selling to. The Wii did a good job. They are four months in. They are still in allocation, launch mode. It will take time. I’m not saying they are not a good competitor. Sony is doing terribly. Nintendo is doing well.”

Penello said that the launch of the Elite didn’t really affect Microsoft’s change in its forecast for sales ending the year June 30. As you recall, Microsoft shaved at least 1 million units off its forecast, partly because of a changing sales outlook and a focus on profits. That suggests that they are not planning a price cut during the first half of the year.

Penello said that there have been more than 135 million downloads from Xbox Live to date. He would not break out the movie or TV download figures, but noted that they led to a 400-percent increase in downloads. Next to iTunes, he said that Xbox Live is the No. 2 legal downloading service.

He said that five Xbox 360 titles have sold over a million units: Call of Duty 2, Gears of War, Madden, Ghost Recon Advanced Warfighter and Uno on Xbox Live Arcade.

I have a mixed opinion about the benefits of HDMI. Gears of War, for instance, looks outstanding when it is scaled up to 1080p resolution, even though I’ve used the Xbox 360 only with a component cable. (I haven’t tried VGA). I suppose that game would look better, but I’m not sure I could articulate the difference to anybody even if I saw it. Penello noted that Microsoft will include an HDMI cable in the Elite, which he said was a $50 value.

The accessories for the Elite will all be black.

Regarding IPTV, Penello said, “It doesn’t have anything to do with IPTV. How it will be distributed has a lot to do with the partners. How it gets delivered to consumers will depend on service offered by the partners. We haven’t talked about how we would deliver IPTV. How you get IPTV will vary by vendors around the world.” That’s a step back from what I heard from Bill Gates at the Consumer Electronics Show in January. Gates said back then that any Xbox 360 — the Core, the Xbox 360 — would be capable of handling IPTV if necessary. So I am still assuming that, whenever Microsoft’s IPTV partners launch, they will likely be happy to take advantage of the 120-gigabyte hard drive in the Elite to store videos recorded by the IPTV service’s digital video recording feature.

Now I am not prepared to say that Microsoft will offer IPTV on the Xbox 360 at a certain timetable. It has to strike deals with the likes of AT&T, which is offering the IPTV Uverse service. But to me, the great advantage of the the Elite will be the large hard drive that allows it to function as a DVR. And that DVR is most useful as one of the features of an IPTV service. (Got that?).

It’s also interesting to note something that Gates said to me in January. He said that with IPTV, they have developed an efficient streaming architecture. You can instantly get a video feed without waiting for a long download. Thus, with a big menu of video on demand choices, there isn’t as much need to actually store videos on the hard drive. Some people will still want to store movies they’ve purchased. But that’s why Gates said IPTV could still work on a drive-less Core unit. So the scenarios here can vary. But if the Xbox 360 has Sony beat on anything so far, it’s the ability to offer IPTV service. (If you haven’t seen a demo of Uverse yet, AT&T is giving the hard sell in a variety of malls where the service is rolling out. It seems pretty compelling to me as a cable competitor).

In other matters, Penello said, “Japan is a tough market. We are making inroads with the Japanese publishers and are getting content like the Devil May Cry franchise which was previously only on PlayStation.”

Here’s some answers to some other questions I emailed Microsoft:



How many movies are now available for download on the Xbox 360? Also, how many TV shows are going to be available on the Xbox 360?

More than 1500 hours of premium entertainment content is available on Xbox LIVE Video Marketplace and new content is being added all the time which is why we do not provide a breakdown for number of TV Shows vs. number of movies.



Was there a reason that you did not include wireless networking WiFi in the Elite?

There are so many options with connectivity, it didn’t make sense to make everyone pay for something they may not use. Many of our core LIVE users play with a wired connection. Peoples home configurations are different and people with multiple devices may require bridges. Also – as wireless protocols continue to evolve, you find that built-in solutions are inevitably outdated; as soon as we would have included a G adapter, everyone would be switching to N. We think giving customers the choice to decide how they want to connect is the best route.



When will the Xbox 360 get 65-nanometer chips?

We are constantly updating internal components on our consoles and therefore do not have a specific timeframe.



When will this go on sale in other countries re the Elite?

Xbox 360 Elite will be available in North America beginning on April 29. The Xbox 360 Elite will be available in other regions around the world. We will announce its availability in those regions when we have a firm date of arrival in stores.

And finally, here is the release:
REDMOND, Wash. — March 27, 2007 — Microsoft Corp. today announced the upcoming availability of Xbox 360™ Elite, a new model of the video game and entertainment system that will include a 120GB hard drive, a high-definition multimedia interface (HDMI) port, a high-definition cable, and a premium black finish for the console, wireless controller and Xbox LIVE® headset. Xbox 360 Elite has enough space for a library of Xbox LIVE Arcade games and thousands of songs, as well as downloadable high-definition TV shows and movies available on Xbox LIVE Marketplace. The new 120GB hard drive also will be sold as a stand-alone accessory to give current Xbox 360 owners greater choice and flexibility in their games and entertainment experience. Additional Xbox 360 Elite accessories, such as the black Xbox 360 Wireless Controller, Xbox 360 Play & Charge kit and the Xbox 360 rechargeable battery, will be available separately. The Xbox 360 Elite and its accessories are expected to begin arriving in U.S. stores on April 29.

“Today’s games and entertainment enthusiast has an insatiable appetite for digital high-definition content,” said Peter Moore, corporate vice president for the Interactive Entertainment Business at Microsoft. “Xbox 360 Elite’s larger hard drive and premium accessories will allow our community to enjoy all that the next generation of entertainment has to offer.”

Distinguished by its black finish and signature metallic detailing, Xbox 360 Elite will have an estimated retail price1 of $479.99 (U.S.)/479.99 euros/349.99 pounds, and will come packed with components and accessories for the ultimate high-definition entertainment experience:2

· Xbox 360 Elite console. The console is equipped with a premium black finish and three powerful core processors capable of producing the best in HD entertainment (up to 1080p), 16:9 cinematic aspect ratio, anti-aliasing for smooth textures, full surround sound, HDMI output and DVD playback with upscaling capabilities right out of the box.

· Xbox 360 120GB hard drive. The 120GB detachable hard drive allows gamers to save their games and store television shows, movies, music, pictures, trailers, levels, demos and other content available from Xbox LIVE Marketplace.3 The hard drive is sold separately for an estimated retail price of $179.99 (U.S.)/179.99 euros/119.99 pounds.

· Xbox 360 Wireless Controller (black). This award-winning, high-performance wireless controller, now in black, features the Xbox® Guide Button for quick, in-game access to friends and music. It has a range of up to 30 feet and a battery life of 30 hours on two AA batteries. It is sold separately for an estimated retail price of $49.99 (U.S.)/44.99 euros/32.99 pounds.

· Xbox 360 headset (black). Now available in black, the headset lets gamers strategize or trade taunts while playing games and send voice messages to friends on Xbox LIVE.

· Xbox 360 HDMI cable. New to Xbox 360, HDMI allows consumers to get HD video (up to 1080p) and multichannel surround sound, all from one cable.

· Xbox LIVE Silver Membership. With this, gamers can chat with friends online, collect achievements and gamerscores, send and receive voice and text messages, and access Xbox LIVE Marketplace content such as game demos, HD movies and TV, as well as the best in downloadable games from Xbox LIVE Arcade.

· One-month subscription to Xbox LIVE Gold. An Xbox LIVE Gold Membership provides a complete online entertainment experience. Those who subscribe to this premium service can engage in competitive online multiplayer matches, tailor their matchmaking via feedback and accomplishments, chat with more than one person at a time, and take advantage of unique privileges in the Xbox LIVE Marketplace and Xbox LIVE Arcade.

The following accessories for the Xbox 360 Elite console will only be sold separately:

· Xbox 360 Play & Charge kit. Complete with a charging cable and a black rechargeable battery pack, the Xbox 360 Play & Charge kit allows gamers to recharge their Xbox 360 Wireless Controller without interrupting their gameplay. it is sold separately for an estimated retail price of $19.99 (U.S.)/19.99 euros/14.99 pounds.

· Xbox 360 rechargeable battery (black). The rechargeable battery pack provides more than 25 hours of gameplay per charge. It is sold separately for an estimated retail price of $11.99 (U.S.)/11.99 euros/9.99 pounds.

Source : http://blogs.mercurynews.com