Microsoft wants to sell you a cheap Xbox 360 with a two-year contract. Don't do it!
Last week there was a rumor circulating that Microsoft was going to start selling Xbox 360s like Verizon and AT& sell cellphones: a little money down and a two year contract. I didn't report on it because it just seemed like a dumb idea.
Well, dumb or not, the rumor was correct and the deal is now official. The Verge broke the original rumor story so let's give them the link love for the official announcement.
So here's the deal. You put down $99 and take home an Xbox 360 4GB model (no hard drive) and a Kinect sensor. You sign a two year contract for $15/month, and that gets you an Xbox Live Gold account. The biggest catch is that, for now at least, it seems like you have to find an elusive Microsoft retail store to take advantage of the deal.
But why would you want to? You'll be paying $99 + $359.76 in monthly fees, or $458.76 over the course of two years. Compare that with (I'm using prices from Amazon that were accurate as of May 7th, 2012) $287.70 for an Xbox 360 4GB + Kinect bundle, and two 12-month Xbox Live Gold cards at $48.41 each, a total of $384.52. So you're paying almost $75 for the privilege of laying out small cash now.
And these numbers assume you don't keep an eye out for a good super-deal on 12 Month Xbox Live Gold cards, and those do come around pretty often.
Using retail figures the deal seems better. The 12 Month Gold cards retail for $59.99 and the hardware bundle for $299.99 for a total of $419.97, but if you're paying full retail for this stuff, you're doing it wrong.
I'd also recommend that if you're just getting into Xbox 360 gaming you should spend the extra money and get a model with a hard drive. There's a lot of digital content on the Xbox Live Marketplace and you're going to want to have the space to download a bunch of it.
But even if you're sure 4GB is enough space (and truthfully you can add more capacity via USB drives), how are you going to feel making your monthly payment on your Xbox 360 in May 2014 when all your friends are playing on their Xbox 720 consoles?
Oh, and if you're strapped for cash and can't make a payment? Get ready to pay Early Termination Fees. Engadget has a nice schedule of those. They start at $250 for the first 3 months, drop to $240 on month four and then drop a further $12/month after that point. So a year into your contract if you decide Xbox isn't for you, you'll pay $144 in Early Termination Fees.
Seriously, if you really want an Xbox 360, just save your money a little longer and buy it outright. This isn't a good deal and I don't like the precedent it sets, either. We don't need to be buying gaming consoles on contract. Just say no!
Read more of Peter Smith's TechnoFile blog and follow the latest IT news at ITworld. Follow Peter on Twitter at @pasmith. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.