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Also you have to take not only the pricing model for hardware for these systems. It costs these companies, with their discounts, probably $300 to build each system, probably more like $350. Alot of people say, "You can build a PC like that for ~600-700. Consoles are weak!" Well, yeah you could, but these companies have to make money on the system, even if it's just a little bit. You don't want to be like the Wii U and lose money right out the gate.
Basically Xbox said that they thought their hardware was worth $500 with Kinect. Sony lowballed them and said, "We're going to cut our price down, get out of the gate fast, and basically flip the tables on you and take a little less money per system in the process in order to do it." Xbox was obviously taken back and knew that they had screwed up. They've done almost everything possible outside of not including the Kinect in the bundle and they're still behind by many reports. What PS4 did was genius for the beginning of the console war, but now they have to sustain it to keep up above Microsoft.
The reason we buy home consoles instead of PC's will always be because of the titles and what our friends play on. Until you see all Halo games and Uncharted games coming out for PC's, there will always be a need for consoles. It's the reason why Nintendo will be in business for many years to come because they have a huge pile of money, their handhelds sell surprisingly well, and they have Zelda, Mario, and Metroid in their back pockets.
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