So hopefully everyone knows the big news that came out of E3. Sony literally gave Microsoft the finger with their official unveiling of the Playstation 4, and it'll be rough for Microsoft to dig themselves out of the hole they dug for themselves. Judging from the complete lack of any real response from Microsoft at this point, they have no idea what to do at this point in time.
Where did Microsoft go wrong? Considering that the Xbox 360 currently has higher market share than the Playstation 3, Microsoft could have just maintained the status quo, put the price point of the One at $400, and probably kept cruising along. Instead, they released confusing messages about used games and requiring an Internet connection and then announced a price point of $500, hoping that flashing pictures of a new Halo game and realistic Call of Duty dogs would pull the wool over gamers' eyes.
Forbes called this one entirely correct. There was no reason for Microsoft to do any of this. So what was the motivation? I call greed. These past few years have shown a new Microsoft trying to push the bar on how far they can go on pricing. By allowing all of their products to be linked through a Microsoft account, Microsoft has a truly unique ability to be a part of every aspect of a family's day. Think about the products Microsoft has released: Windows Phone, Xbox and Kinect, Surface, Bing, Zune (but more importantly Zune Pass), Outlook.com, and of course the ever ubiquitous Windows and Office. These products cover everything from work and school to entertainment and social life.
What happened then is Microsoft got too ahead of themselves. They made the assumption that everyone would buy into this connected life with little to no regard for price or ease of use. Everyone was shocked when the price of the Surface was announced, yet it's still selling and there probably won't be a price cut anytime soon. That set a dangerous precedent for the Xbox One. When Microsoft did their on-campus unveiling of the One, I predicted a price point of $500 based on the pricing of the Surface alone. My other friends weren't expecting it to be more than $300, to keep it in line with 360 pricing and facilitate the jump to a new console with no backwards compatibility. I wasn't happy to be proven right.
So what can Microsoft do now? To be honest, any move they make now is just conceding that Sony completely outplayed them. It's going to be hard for them to lose face like that. Microsoft's current "take it or leave it" stance on their Xbox One policies reinforce that they're unwilling to try to make any corrections now. Unfortunately, this will probably come back to bite them later on. This unwillingness to budge is most likely going to give Sony the upper hand for the next 5 years or so until the next "next gen" console is released.