There's little doubt that gaming in the next cycle is going to be more expensive. At least one major publisher (Activision) has gone on record saying it plans to increase wholesale prices on its AAA games. Others will likely follow its lead. That will probably result in retail prices jumping $5 to $10 per title.
They tried this with the first XBox as well, originally the games were $10 more, supposedly MS's license fees were the cause. MS later lowered the prices to compare with the competition.
"We think Microsoft will price its next generation system at or above $300 for the base model," wrote Gikas. "We also think there will be a model that includes accessories or network devices that could price as high as $350-$400/system."
That's kind of shitty. Who will want to pay those prices? I had a problem paying that much for consoles when they originally were released last generation as well. The original XBox was pretty damn expensive compared to the other consoles and MS dragged their feet forever before finally dropping their prices to match competitors.
If the market adopts these prices, other console manufacturers may either undercut MS or adopt these prices themselves (I hope not).
Adding some accessories (like a network device) certainly does not warrant a $50-$100 price raise either. If anything consoles are supposed to be undersold and the price made up with license fees. Inflating the price of a cheapass NIC chipset and some other stupid shit to $50 (let alone $100) is fucking ridiculous. It seems like price gouging for an "enhanced" market segment. "You can always buy our cheap broke-ass version of the console!"
If they could provide the XBox at the price they do now with these accessories, they should be able to do the same with the XBox 2. I realize they're losing money on the XBox but the NIC and 10GB hard disk are hardly the most expensive parts. What would a 10GB hard drive and a NIC be worth nowadays? Not that much, but it would still be sufficient storage for a console.