Microsoft currently offers three Xbox 360 models. The Arcade, with no hard drive. The Premium with a 20GB hard drive. And the Elite with a 120GB hard drive. This is all going to change, to much bigger drives, and there are four reasons why.
Firstly there is the business model of the hard drive manufacturers. They compete mainly not on price but instead on disk size. They are constantly driving up the capacity of their drives (by 40% a year compound) using technology whilst trying to keep prices constant. So the cheapest drive to buy is the one they are currently making most of. This will usually be cheaper than a smaller capacity drive. Just now top end hard drives for home and office PCs are one terabyte (1,000 GB) with 4 terabytes on the way, so they have left the Xbox 360 way behind. Interestingly a quick price search shows that 250 GB drives are currently cheaper than 120 GB drives. And as to the 20GB drive that Microsoft use in the Premium, in this industry that is pretty much a fossil. So it isn’t even going to cost money to give us bigger hard drives.
The second reason is the demise of HD DVD. This was the high capacity content delivery system for the Xbox 360. Now it has gone Microsoft say that they are not going to switch to BluRay, instead they are going to concentrate on downloading content. This is only bringing forward the inevitable. The problem with downloaded content is that you have to store it somewhere. And HD movies take up a lot of disk space. So huge hard drives are essential to get the machine to do what the customer wants it to do. The whole Microsoft business model for the Xbox 360 now depends on this.
The third reason is profit. The more storage space someone has the more content you can sell them. And there is vastly more profit to be made from selling the content of a hard drive than there is from selling the hard drive itself. Microsoft know that the bigger the hard drives the more profit they will make. This incentivises them to go for the biggest hard drives possible.
The fourth reason is competitive advantage. By switching to downloadable content instead of physical media for distribution Microsoft can be seen to be more advanced than Sony. Also far more customer friendly. You will be able to have the content you want when you want it. The PS3 currently comes in 40GB and 80 GB (NTSC only) models. By offering vastly bigger hard drives Microsoft can be seen to be offering a better product. And because the 360 hard drive is easily removable existing owners can easily upgrade to take advantage of the bigger drives. One advantage of the RROD episode is that Microsoft have learned how to transfer a customer’s content from one drive to another.
So there are compelling reasons for Microsoft to go as big as possible as soon as possible. The 120 GB model was introduced in August 2007 and already, when you look at the reasons above, it is looking small. The 20GB Premium model is difficult to justify.  So expect a realignment of the model range and their hard disk sizes this year. Also look for the Xbox 360 to have terabyte range hard drives within the next couple of years.
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“And because the 360 hard drive is easily removable existing owners can easily upgrade to take advantage of the bigger drives.”
Sorry but I think you got it wrong here. If you want to change the HD in the X360, you have to buy another “special HD for X360” (i.e. a HD in a proprietary box that will cost you 10 times more than a normal HD) and use a special cable to copy the datas from your old HD to the new one. It’s not impossible, but it’s not extremely easy.
On PS3 it is.
Forst of all you have to copy your datas to an external backup USB-HD/PC/etc, then open your console and change the HD with a normal one you can buy in every store. The manual shows you how to do it and it’s extremely easy. One screw and it’s done 🙂
So, it’s way, way easier (and even more cheaper) for a PS3 user to upgrade his console. Plus you can decide the size of your HD, not Sony or MS.
That said, if MS will start releasing something good in the Italian marketplace too, I’ll probably buy a larger HD for my X360. Until then, 20GB are more than enough 🙂
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I think Bruce means “Easily replaceable with an official upgrade”, which it absolutely is. There’s a lack of choice on what those upgrades are but it’s certainly easy to take advantage of them.
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The pricing of the XBOX hard drive is a disgrace compared to the PS3. They need to resolve that problem or they may prefer it that way… and alienate their customers. Retailers need profitable product and the consoles are a loss leader. It is all down to attachment sales.
Also, you have railed against bit-torrent and piracy. MP3s would not be as popular as they are were it not for piracy. At the height of the MP3 Napster piracy arguement the recording industry issued two news releases. One complained about how much money they were losing to piracy, the other announced that Eminem had the fastest selling CD ever, this came a matter of weeks after Britney had set the record. Two artists whose main appeal was the exact bracket that the music industry were accusing of ripping them off.
Apple would not be as successful as they are now were it not for MP3s therefor piracy. BBC distribute their TV via modified bittorrent. The BBC arguably used bittorrent to promote Dr Who worldwide and it worked for them.
Microsoft’s software distribution model has to go the same way. I should get lots of little pieces of the demo that I want from lots of people quickly, not wait a lifetime for Microsoft’s servers to deliver the identical content to me and thousands of others at the same time.
Like MP3 before it, bittorrent has moved out of the realm of the geeks and into the mainstream, it has achieved this by providing a desirable (yet totally illegal) content. The illegal part is being actively killed by politicians and telco’s. Bittorrents technology will be picked up by Corporations and used to massively boast their profits.
It is hardly worth talking about. Right now the geeks are probably using something that cannot be tracked and works much fasted than bittorrent and so the cycle will repeat.
Steam is the solution…
Wish I could buy stocks in Valve!
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Bruce – Three things about your post.
1. You’re absolutely right all around. Downloadable content as a business model is where the world is headed. Look at Netflix. Look at iTunes. Look at any number of companies that realize that the hardware is cheap and a one-time sale, while the software/programming is something you can charge for constantly.
2. I recently got a 360 (with a 20GB) and was thinking of putting a bigger drive in it. I have a 500GB 2.5″ SATA drive here. Will that work? Will it see the whole 500GB?
3. One last question, and this is about your blog. How do you make those awesome social networking icons work? I’ve had so much trouble getting them to go on my own blog that I’m about to give up.
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Why did the XBox 360 choose to make special hard drives? lol. I’m so glad I got a PS3, they are so much better xD