Backstage: Xbox 360 and the iPod, part deux

When we last checked in with the Xbox 360 rumor mill, Microsoft was supposedly considering the platform as a potential challenger to Apple’s iPod: a game console with a portable storage device that also serves as a music player. If the latest whispers we’ve heard prove true, the company’s impending strategy is going to be even more Apple-influenced than we’d expected. You’ve probably already seen the shots of the console, which has widely been described as highly Applesque in person, but what’s coming next are the commercials and the spin. Apparently, the Xbox 360’s going to be pitched globally as the “must-have” gadget of the year (hear that, iPod and PSP?), and its music functionality is going to be a major emphasis of the campaign. Early shots of one side of the system suggest that a 40GB hard drive is in the offing, if nothing else.

The only hard part to swallow is what we’ve heard recently about the company’s earlier plan to sell two versions – one at $299, one at $399 with the portable drive – with 80% of the initial consoles being the more expensive one. Now we’re hearing that the company’s (wisely) skipping the spooky $399 price point, but – and here’s the part we’d call “impossible” – still planning to include the portable drive for the lower price. Sure, Microsoft’s accustomed to losing money on these things (billions of dollars, literally, on the first Xbox), but is it really ready to eat $100 or so per unit for a pocketable 40GB hard drive? It’s almost unimaginable, except for a company that’s looking to consolidate two second-place divisions (music and Xbox) under one line item for purposes of bleeding money (and desperately fighting for market share).

We’ll see. The debut is only a week away at this point, but we’re betting that the machine ships with a smaller drive – or none at all. Microsoft’s not dumb enough to get stuck fighting hard drive component prices twice in a row, is it?

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