I’m slightly amazed that even with the announcement of the possible Xenon specs, people still seem inexorable over the possibility that it will launch in the $300 price window that most recent consoles have occupied at launch. It almost seems like any other price for a console launch is completely unthinkable and would be commercial suicide for Microsoft and, I’d assume, Sony.

Would it, though? People seem to be willing to spend £1,500 or more on a gaming PC, £2,000 or more on a nice HDTV, a couple of grand on a sound system, a couple of hundred on a decent DVD player, and I’m sure that the initial HD DVD/Blu-ray players will sell well at their $300-500 (US) price points. Why is a console costing more than £300 one of gaming’s last taboos, then? People are only too happy to (sometimes validly) complain about the cost of a new game but it’s the huge losses on hardware that force these prices. Personally I spend a lot more over the lifespan of a console on games than the actual machine, so I’d prefer to pay £500 for the console and then have games available at DVD prices. That would benefit the manufacturer as well, since piracy isn’t going to cause such huge losses for them.

To me the fact that the PSP is launching in the US for $250, only $50 shy of the usual price for a new home console, should be the first indication that we’re not going to see the new machines launching in the same old price bracket. When people are willing to pay £2,000 for a gaming PC don’t you think that a console would sell for £500? If what Microsoft and Sony are saying isn’t all marketing rhetoric both of their consoles will be more powerful than any PC on the market, so that sounds like a pretty good deal to me. It’s not uncommon for a sought-after console to reach $800 on eBay at launch, so people are willing to pay when they have to.

It’s true that consoles are almost always sold at a loss initially and that the money is made back on the games, but no matter how big the company is they simply cannot afford to sell (ballpark figure) £1,500 worth of electronics for £350. If they take a cut of £10 from every game sold every person would have to buy 115 games for it to be profitable, and that’s never going to happen. They’d be very lucky to persuade people to buy twenty at £40 per game, and even if the costs were £1,000 per unit, each person would need to buy 65 game to make it profitable. I know people who pirate every single one of their games and most of them don’t even have that many when they’re free.

So what if parents won’t buy a $500 machine for their kids? They buy relatively very few games, maybe one for birthdays and one for Christmas plus a couple more, but the bigger 20-30 market with a high disposable income can afford it and tend to buy a lot more games. Games, not hardware, are where the money is made, after all. It all depends on whether market share (what Sony and Microsoft fight over) or profitability (what Nintendo has) is more important. Just remember that a company can’t exist on market share alone.

The revelation of the Xenon specs will no doubt herald the beginning of the new console wars, just as the flames of the current one are beginning to fade. Sony have been brash about what we can expect about the capabilities of PlayStation 3, although some have been cautious of their “Cell” and “Blu-Ray” buzzwords after the failed promises of the PS2. Wasn’t it supposed to be your home media hub, capable of rendering Toy Story in real time? Unsurprisingly some were let down when it turned out to be more like an overclocked Dreamcast.

If these specs are to be believed, the Xenon is going to have insane amounts of processing power. A Power Mac G5 with dual 2.5GHz PowerPC processors wipes the floor with pretty much anything on x86 systems, so when the Xenon has three 3GHz ones it could be phenomenally powerful. Toss in a graphics card a whole generation ahead of the current best PC card and 256MB RAM (it doesn’t sound like a lot, but the Xbox could do a lot with 64MB) and we could seriously be approaching the level of raw power needed for photorealism. The difference between the current generation and this could be like comparing games on the PS1 to Xbox.

What I do find strange is the potential for bottlenecks. The power of those processors is immense, but it’s never even going to break into a sweat with what a next-gen X800 and 256MB shared RAM can throw at it. It might hold the advantage of being able to crunch massive numbers for things like realistic physics engines and dynamic lighting while leaving all the graphics to the GPU, but I still just can’t see that much power being utilised. It’s also going to carry the issue with multiple processors becoming exponentially more difficult for developers to take advantage of and that is, therefore, going to take even more power away from independent developers and shift it into the big boys like EA. That’s not good.

The decisions to plump for standard DVD-ROM instead of HD-DVD or Blu-Ray and to drop the standard hard drive are fairly baffling, too. DVD is going to struggle to accommodate the textures that they’re going to be pumping out for this stuff, as well as the inevitable HD video content, and loses out on an obvious selling point of being able to play those new hi-def movies. With HD-DVD using Microsoft’s own video codec it seemed like an obvious choice, but maybe not. Of course, with DVD writers being widespread it’s also going to cause piracy issues.

The hard drive was one of the most popular features in the Xbox, allowing saves without memory cards, custom soundtracks, faster load times, and content downloads, so losing it is huge. When it’s not standard it won’t be supported (look at the PS2 hard drive), and when the PS3 will almost certainly contain one they seem to be making an odd concession to Sony by giving them a nice advantage. An HD is so cheap now that it seems idiotic not to throw it in, but we’ll have to see if Microsoft has thought of an angle that is invisible to everyone else.

With the Xenon and PS3 obviously packing such power, it seems impossible for them to be able to pack them into the standard £300/$300 price bracket. Look at those dual-2.5GHz Power Macs – they cost £2,000, and there’s no way that a console can sell for that price. Anecdotal evidence holds that Microsoft lost $700 on the sale of every Xbox at launch and I seriously doubt that they can afford to do that again. I’d prefer to pay more for the console so that they can make a profit on it and sell games cheaper, but that doesn’t mean that I’d buy a £1,000 console.

I guess “wait for E3” is going to be the answer, as usual.