On Tuesday, Xbox Chief Marketing Officer Yusuf Mehdi announced that Microsoft's new video game console, Xbox One, has headed into production. Mehdi noted that console preorders have "sold out," without providing a sales figure. But he deflected concerns about the Xbox One's $500 price tag.
"We are now producing in mass the Xbox One console," Mr. Mehdi said during an appearance at the Citi Global Technology Conference. "We recently just went into full production ... This will be the biggest launch we've ever done by a wide margin in terms of units shipped at launch."
Mehdi didn't directly address many of the questions that surround the Xbox One these days.
While Sony has announced staggering preorder sales of its PlayStation 4 console of 1 million units, Mehdi only noted nebulously that the Xbox One preorders had sold out, without revealing how many units that entails. And where Sony has established November 15, 2013, as its PlayStation 4 release date, Microsoft has yet to reveal when it will ship Xbox One to customers. "We're on track for launch this November," Mehdi said. "We will announce the launch date shortly"
UPDATE: He wasn't kidding. Microsoft announced on Wednesday that the Xbox One would ship on November 22, 2013.
When asked about the Xbox One's $500 price tag—a full $100 higher than that of the Sony PlayStation 4—Mehdi said that the prices of the two consoles were actually "pretty comparable," but didn't explain why that was so. (A PlayStation 4 customer who also purchases the separate PlayStation Camera, which is similar to the Kinect that Microsoft bundles with Xbox One, would pay a total of about $460.)
Mehdi also addressed a central issue to console production: The company has never made money selling the actual devices. But this time around, Microsoft hopes to change that.
"We're looking to be break-even or low margin at worse on hardware," he said of the Xbox One. "We make money selling additional games, services, and other capabilities on top. And as we can cost-reduce our box as we've done with the Xbox 360, we'll do that to continue to price reduce and get even more competitive with our offering."
He also revealed a minor technical change: Microsoft slightly bumped up the graphics processing of the Xbox One at the last minute, pushing its GPU to 1.5GHz. It's unclear how this change will really impact the system, although Mehdi spoke vaguely about games that look "pretty incredible."
Microsoft's central vision for the Xbox One, of course, is a continuation of its PC, tablet, and phone user experiences to the living room, and a deep level of integration between these device types. And he says that the market for the current-generation devices—Xbox 360, PlayStation 3, and Nintendo Wii—is about 300 million units, with the next-generation consoles growing the market from there.
"The world for gaming is growing," he said. "It's the fastest-growing segment of all of entertainment in terms of our views as well as dollars spent. And we think that that is going to continue to grow in this generation."