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MS prepared to lower Xbox One price in 2014, says analyst

Industry watchers weigh in with sales expectations for the upcoming consoles

Wedbush Morgan analyst Michael Pachter thinks Microsoft is prepared to cut the Xbox One price price in 2014 if sales of the console don't keep pace with the cheaper PS4.

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However, following last night's announcement that Microsoft has abandoned its controversial DRM policies for the console, the analyst said he expects Xbox One to sell as many units as PS4, despite its higher price point due to the inclusion of Kinect.

"Microsoft intends to offer a more robust hardware bundle than Sony will offer, and Microsoft is convinced that consumers will ultimately appreciate the value proposition presented by Kinect," Pachter said in a research note.

"Microsoft has not done a particularly good job of communicating the value proposition to consumers, but today's announcement will remove an impediment to the company's ability to get its message across. We are confident that with six months of focused messaging, Microsoft can fully level the playing field with Sony, and we expect the Xbox One to sell as many units as the PS4. If we are wrong, we think that Microsoft is prepared to lower price next year."

Edward Woo, senior research analyst at Ascendiant Capital Markets, told Edge he expects both consoles to sell two million units in 2013, but he also forecast ten million PS4 sales in 2014 compared to just five million Xbox One sales next year.

"I think the consoles are very similar so the $100 price difference will now be very important," he said. "Microsoft will have to explain why the $100 is worth the price. I don't know if they will be successful, though they do seem to have a slight edge with more exclusive software right now."

Woo said of Microsoft's DRM policy reversal: "While this levels things more, I still think Sony, with the $100 price advantage and goodwill from the Microsoft mess, still has the upper hand."

Piers Harding-Rolls, IHS Screen Digest's senior principal analyst and head of games, also told Edge: "We believe price will be the biggest differentiating feature and have slightly adjusted down our Xbox One sales expectation for continental Europe at launch, based on the €100 gap in pricing."

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