Xbox One Price Analysis: Would $500 Be A Fair Cost? Putting Things Into Perspective

Last week, a few early listings for the Xbox One were posted on a number of retailers' websites. These ranged from $600 all the way up to $900, and although they are all placeholder costs, they do represent what store owners feel might be the upper end of the pricing possibilities.

Microsoft analyst Paul Thurrott meanwhile places the actual cost somewhere in the $500 range, with a $300 option when bundled with a two year contract for Xbox Live. Even disregarding the more outrageous figures, $500 still sounds pretty expensive. But what would be a fair price?

To put it into perspective, the Xbox 360 launched in 2005 priced at $399.99, or $299.99 for the "core" system. Factoring in inflation, according to the Bureau of Labor Statistics, $399 in 2005 is approximately equivalent to $475 in 2013.

That puts the $500 launch figure a bit higher than Microsoft's previous console launch. However, there are a few differences this time around. For starters, the Kinect will be bundled with the new console, instead of sold separately. The Kinect currently retails at around $100.

We also have to put into consideration the fact that the Xbox One is not just a gaming console. Despite the negative reaction to these features, Microsoft's console seems well suited to replace not only a Blu-ray player, but also act as a digital media receiver similar to devices such as the Apple TV.

For reference, most Blu-ray players today range from around $50 to $150, with WiFi functionality generally included somewhere in the $100 to $150 range. Meanwhile, an Apple TV device runs around $100.

This means that the Xbox One will come packaged with around $150 to $250 worth of additional functionality, allowing you to trade out older devices, or even upgrade to Blu-ray if you haven't made the jump yet.

While you can't put a number on it, it's also important to note the convenience aspect. In other words, not having to switch between a Blu-ray player, a game console, a streaming video device, and your cable TV signal could be pretty handy for many people. My TV set for example only has one HDMI port, requiring me to use a splitter to hook up just two of these devices.

Overall, it seems it would depend on your current entertainment center setup to determine whether or not the Xbox One's proposed $500 price point is fair.

If it saves you the cost of buying a WiFi/streaming video enabled Blu-ray player, then it seems like the money saved would definitely make up for the higher launch price. On the other hand, if you are buying it solely as a gaming platform, you might find that it's a bit pricier this time around.