MS struggling with Kinect pricing

Analyst Michael Pachter believes that the reason behind the continued lack of a confirmed RRP for Microsoft’s Kinect motion camera is that the platform holder is still struggling with some aspects of its launch strategy for the device.

Speaking in a note to investors, Pachter noted that he was less impressed” with both Kinect and Move than he was with Nintendo’s 3DS, adding: We think unlike the 3DS (which is a truly revolutionary experience), pricing for Kinect and Move will have a profound impact on ultimate sell-through.

Microsoft did not announce a price point for Kinect. We think that the company is struggling with a pricing strategy, as it is logical to argue that the lifetime value of a customer is quite high, due to the user-friendliness of the device.

In our view, Microsoft could dramatically expand usage of its 40m Xbox 360 installed base if it could drive Kinect sales to this audience, as we believe that the non-gamers in the typical Xbox 360 household will find Kinect inviting and unintimidating.

We think that if Microsoft prices Kinect close to cost (which we estimate to be around $70), it will see a very high attach rate, with the potential to drive $200 – 400 in lifetime value from each Kinect household. On the other hand, it is equally logical to charge a very high price for the device, especially if it is expected to be supply-constrained.”

You can read Michael Pachter’s full E3 2010 analysis here.

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