Microsoft took a bold strategic plunge Tuesday when it announced it will be unbundling the Kinect motion camera from its Xbox One and selling the video game console as a stand-alone unit for $399, putting its price tag on par with Sony's better-selling PlayStation 4 console.
But instead of labeling the Kinect a peripheral failure, Microsoft is channeling a different narrative. Similar to how the Xbox 360 was originally sold at two tiers -- a 20GB "Pro" version and a cheaper, hard-drive-less "Core" model that was later replaced by the Xbox 360 Arcade line -- Microsoft wants its $499 Xbox One with Kinect to remain the flagship product.
So much so that Xbox head Phil Spencer thinks the company will sell more Kinect units after this shift. Microsoft expects to begin selling the camera by itself later this year.
"It was really all about consumer choice," Spencer said in an interview with CNET. "Like we would have said on 360, the best experience was with the biggest hard drive possible. On Xbox One, I think the best experience is with Kinect."
With Xbox 360 Arcade, players paid $70 less than the "Pro" model for a dismal 256MB of storage, which would be increased two thousand times over with the Xbox One nine years later. Though no one was downloading games onto their hard drive back then, when the Arcade model came out it was still hard to believe that the unit was worth $270, even it if was marketed toward casual gamers.
The Kinect unbundling represents a far different bargain for consumers, with only a $100 price difference and identical Xbox One hardware. With this move, Microsoft is hoping the value proposition of owning the full Xbox One package will remain high enough to not only get people to keep buying the $499 version, but to drive overall adoption of the Kinect if those who opt for the lower-tier model decide to pony up for the accessory down the line.
"If consumers choose that they don't want Kinect, or they want to add it later, we're going to make that available. But this is about a continuum and in the end, I hope everyone sees that the experience with Kinect is the best Xbox One experience," Spencer added.
"In the long run, I think we'll actually end up with more Xbox One's with Kinect out there with this strategy," Spencer said.