Microsoft Monday confirmed rumors of an $99 Xbox (£61), announcing a deal that pairs an Xbox 360 4GB, a Kinect, and two years of the Xbox Live Gold service for $15 (£9.20) per month--after $99 down. Only Microsoft's own retail stores carry the offer, so don't look for it at other retail outlets like Target or Walmart.
The company says it wants to "test out a new pricing model" for the Xbox, but will not confirm whether there are plans to offer the $99 console elsewhere in the future. Not every Microsoft Store will be able to sell the subscription plan either: It will be available in 16 of the 21 current Microsoft Stores (Microsoft did not provide a list of the 16).
Study the Fine Print
Does this sound a bit too good to be true? It is, and there's some fine print you need to know about. That Xbox Live subscription is mandatory and, just like your contract cell phone, you will pay an early termination fee of up to $250 (£155) if you need to get out early. The total cost of the subscription over two years is $360 (£223), making the real cost of the console under this plan $459 (£284).
Compare this to purchasing everything up front. Most retailers sell the Xbox 360 4GB/Kindle Bundle for $299 (£185), although Walmart sells a similar package online for $229 (£142). If you add in the Xbox Live Gold service, that's another $120 (£74) - billed at $5 per month. If you go with Walmart's deal, you'd spend $110 (£68) less over two years. Definitely not chump change.
Better yet? Buy the console straight from Microsoft and you get $15 (£9.20) off per year of Xbox Live Gold. There, the console is $299 (£185), but the total you'll spend is around $389 (£24170), $70 (£43) cheaper than the contract plan. But there's an even bigger reason why you will want to stay away.
Microsoft is widely rumored to be launching a new Xbox in 2013. With a new console on the way, do you really want to be tied to a soon-to-be obsolete console? Moral of the story here: Save your money and purchase everything up front if you can. Then enjoy it until the new console arrives.
The price in Pound Sterling has been added as a guide for UK readers and is not the UK's official price for the service or the console - Microsoft has yet to announce if the offer will be made available in the UK.