Xbox One will see cheaper SKU this year - rumor

According to VG247, a cheaper version of the Xbox One should be hitting the market in 2014. The website received confirmation from a senior publishing source, but details are scarce and this should still be taken with a grain of salt.

Rumors about new models of the Xbox One started appearing this week on popular forum NeoGaf, and while those rumors mentioned an Xbox One without a Blu-ray drive and featuring a Bluetooth adaptor, the senior source could not address that speculation. While some of that information seems dubious, Kotaku has noted that Microsoft is actually taking legal action to find the individual who leaked the news. The fact that Microsoft is pursuing a legal route does make us think that at least some of it is true.

The original rumor pointed to a white version of the Xbox One shipping in October and a 1 TB version of the Xbox One in November. The idea is that a discless Xbox One would have a $399 price point allowing Microsoft to match Sony's PlayStation 4, which has taken a slight early lead in the next-gen console race.

Wedbush Securities analyst Michael Pachter slammed the rumor in his most recent note about Microsoft. "To my friends at Microsoft, and to all of my friends who would like to see Microsoft fail: If this rumor is true, it is one of the dumbest ideas of all time. It would alienate GameStop and other retailers, and it would demonstrate that Microsoft can afford to release a 1TB Xbox One at $399 with essentially the same production cost as the $499 model with a 500GB HDD and a Blu-ray drive. That would likely cause gamers to believe that the model with a Blu-ray drive is overpriced, or would cause them to believe that Microsoft is greedy. I have three words for this idea-dumb, dumb, dumb," he wrote in the email to investors.

"However, as I respect the people at Microsoft immensely, and think that they are far from dumb, I don't actually believe the rumor," he added.

If the rumor of a disc less Xbox One proves true, Pachter doesn't see it actually selling well. "Although a $399 Xbox One would make the console price competitive with the PS4, we are skeptical that the new model would be popular. In our view, of the two $399 options, the PS4 would be the more popular, as it would include a disc drive, giving the purchaser the option of trading in or selling his games when he chooses. In addition, a discless box prevents the gamer from playing the disc-based games he has already purchased, limits portability, and decreases his ability to use his PowerUp Rewards credits [at GameStop]. We note that as of November there were over 26 million domestic members in the program, and over 7 million international members, meaning that over 33 million gamers worldwide would likely prefer discs," he said.

"We concede that there are some gamers not involved in the program who would opt for a $399 discless Xbox One over a $399 PS4 or a $499 Xbox One with a Blu-ray drive. We estimate that this percentage of the gaming population is likely under five percent. More importantly, we think this product has the potential to create consumer backlash against Microsoft as being gamer unfriendly."

At the very least, some reduction in price by the end of 2014 for the standard Xbox One model seems reasonable, given that manufacturing efficiencies have been better this generation from the start.