IGN XBox has taken time to explain why Microsoft (and retailers) have decided to offer XBox pre-orders in bundles, with no option for a stand-alone system. Strangely enough, they miss the key reason ...

"Recently, Microsoft has been criticized in the mainstream press for selling a $299 console for $500 and gouging consumers by forcing them to purchase items and accessories they may not want. The truth is, because both retail outlets and MS have a significant interest in the success of a pre-ordering program, both sides have had to agree on several things. Microsoft has insisted that each bundle put together by any store or online dealer include at least one first party game and one official MS accessory."

This is the core of Microsoft's bundle plan. If they can make back some of the astronomical loss (rumored to be an unheard of $75 per unit) by ensuring software and accessory sales, so be it.

IGN XBox further elaborates that anything above Microsoft's plan are a RETAILER choice, and not Microsoft mandate. Sure, they get extra marketing money in addition to sell-through, but Microsoft isn't forcing their hand past the one game, one accessory rule.

But the question that still begs to be answered (and IGN neglects to answer) is ...

Why? Why do this if consumers are SO against it? Sure, Microsoft loves it, retailers love it, and XBox is practically guaranteed to sell out at launch (as all new consoles are quickly snapped-up by the early adopter set), but if the consumers at large can't afford it, isn't that a Bad Thing?

Not really. Sure, the consumers at large won't be able to afford it. At least, not right now. After launch, though, when the bundles are not neccessary to sustain sales, and momentum is on an upswing, you could buy it stand alone. But there's more to it that even this.

Microsoft doesn't want to make the same mistake Sony did. What mistake is that? XBox can play DVDs. At the PS2 launch, retailers sold more MOVIES with the PS2 than they did games. This is largely because Sony had few decent games available at launch (and backwards compatability meant that the NEED to buy software didn't exist). More than half of the PS2 early adopters were buying the console because it was a CHEAP DVD PLAYER. Remember, this was before decent DVD players dropped in price to under $300.

Microsoft KNOWS that selling the DVD Remote that enables movie playback separately is NOT enough of a deterrent to be caught in the same trap. THIS is why they are insisting the the bundle include a Game and an Accessory ... with the loss they are taking on the hardware, people using it as a DVD player or Internet terminal will cost Microsoft dearly.

Retailers are oblivious to this. They don't care if they sell games or movies with the console, they just need to sell SOMETHING. A game console is about as close to a loss-leader (a product priced at a loss to get consumers into the store) as the gaming industry gets. Margins are thin, usually in the single dollar increments. Retailers need to sell SOMETHING else with the console, which is why bundles exist at all, and why retailers don't really care when a company like Microsoft sells "You have to sell these too." It makes sense all around.

This is the reason that the news of TRU selling GameCube in a bundle (despite Nintendo's wishes otherwise) comes as no real surprise. It's also the reason that it's not a problem for GameCube fans.

What?

That's right. Be happy they're offering GameCube bundles.

Lost you, didn't we?

Since GameCube cannot play movies, and has no backwards compatability, you're going to NEED software, a memory card, and probably an extra controller just to get started. Offering bundles makes it easy for the customer ... but only when your choices are already limited.

The only time that bundles are a bad plan is when they restrict consumer choice in order to offset the calculated risk manufacturers take in selling a product below cost.