The strategy is a departure from Microsoft’s previous efforts to place the latest technology advancements into a single system at launch. Rival game-system maker Nintendo Co. debuted a slimmed down version of its Switch console last year. Apple Inc. has employed a tiered-pricing strategy for several years with its iPhone, and earlier this year released a $399 iPhone SE as a lower-price option to expand its smartphone user base.
Microsoft in a tweet Tuesday confirmed the Xbox Series S pricing information as well as the console design, which is smaller than prior models and lacks a disk drive. A spokesman for Microsoft declined to comment about the price of the Xbox Series X, the model it has been promoting as the successor to the Xbox One, or share specifics on when it would be available for sale. The company has previously said to expect a November release date, but it is now unclear whether that means both machines or just one.
The Redmond, Wash., tech giant and Sony Corp. have long been working on next-generation consoles after prior versions, the Microsoft Xbox One and Sony PlayStation 4, were released in 2013. Sony, which is expected to release the PlayStation 5 this fall, hasn’t announced a price for the machine but is likely to do so soon.
The latest Microsoft announcement also shows how technology companies are gearing up to market their latest wares ahead of the holiday shopping season. Apple said Tuesday that it would host an event Sept. 15, at which it is expected to unveil new products. Within weeks, the Cupertino, Calif., company is expected to show its newest generation of iPhones among other gadgets.
Microsoft and Sony have been fierce competitors in the game-console market since 2001, when the former entered the market. Sony launched its first PlayStation system in Japan in 1994 and the U.S. the following year. Though they also compete with Nintendo products, the companies’ machines have been more closely aligned over the years in terms of power and graphics capabilities as well as the selection of games they support.
Both companies are releasing new hardware at a time of growth for the industry. Spending on videogame hardware and software has increased sharply since the start of the coronavirus pandemic, as stay-at-home orders prompted people to seek out games for entertainment and to stay connected with family and friends. Publishers including Electronic Arts Inc. and Activision Blizzard Inc. posted strong revenue for the June quarter, and global software sales are projected to climb 9.3% to $159.3 billion this year, according to market research firm Newzoo BV.
The initial price for Microsoft’s Xbox One was $499. The company stopped disclosing console sales data at the end of 2014, but many analysts say Xbox One sales have trailed those of the PlayStation 4 from the start and remain lower today.
Piers Harding-Rolls, an analyst with Ampere Analysis, said in a Tuesday note to investors that he expects the price for the Xbox Series X to be $499.
Microsoft has said the Xbox Series X will feature enhanced graphics, increased processing power and storage, and technologies such as ray tracing, which produces much more realistic images. Users will be able to play Xbox One games on the new machine.
Details about the new Sony machine’s features were revealed earlier this year and include upgrades in processing power, storage and technologies such as ray tracing, which produces much more realistic images. Sony also said the console will have exclusive games such as “Marvel’s Spider-Man: Miles Morales” and “Horizon Forbidden West.”
Sony initially released the PlayStation 4 with a $399 price tag. Since its debut, more than 106 million PlayStation 4 units have been sold as of Dec. 31, 2019, according to the company.
Microsoft has been ramping up its own game development in recent years, allowing for more Xbox exclusives, and now has 15 studios. But Microsoft won’t have a new installment of its marquee franchise “Halo” ready for its new consoles as originally planned. The company blamed a delay until 2021 on the pandemic and other factors.
Even so, Microsoft is entering this game-hardware phase in a strong place with a new tiered pricing strategy, its Game Pass subscription service amassing more than 10 million users and cloud games under way, Mr. Harding-Rolls said. “There is no doubt that Microsoft is better positioned to compete with Sony at the upcoming launch of the latest consoles compared to the Xbox One and PS4 generation,” he said.
—Bowdeya Tweh contributed to this article.
Write to Sarah E. Needleman at [email protected]
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