"From what I've seen, Sony's gonna have to charge $500 for the PS5 and Microsoft has a big balance sheet," Pachter said.
Pachter contends that high-level hardware inside both consoles carries a premium, but he believes Microsoft is in a better position to lose money (initially) on hardware sales by charging a cheaper price. He believes it's "very likely" the Xbox Series X will debut at $400.
"If they want to cut the price by $100—just price below [PS5] and subsidize the first 10 million [consoles]—they will. So, I think that they're waiting to have Sony blink first and then they'll reveal the price."
It's not just Pachter that sees it playing out this way. So does Peter Moore, who previously held executive roles at Electronics Arts and Microsoft. He was on the same podcast and said Pachter is correct in his thinking that Microsoft can absorb a loss in hardware sales during the first 12 to 18 months.
"Microsoft right now, the stock price, the market cap, everything’s flying for them," Moore said. "Does Satya say, you know, 'this is our opportunity right now, as we did with Xbox 360, let’s get in, let’s price it right'?"
He's referring to Microsoft CEO Satya Nadella. An interesting side note to all this is the prospect of a price war. I think it's a bit less likely, but in theory, Microsoft and Sony could get caught trying to one-up each other, to the benefit of consumers. For example, if Sony announces a $499 price the PS5 and Microsoft responds by announcing a $399 price for the Xbox Series X, does Sony announce a last-minute price cut and/or offer up more storage?
The latter would require some pre-planning, but is not out of the realm of possibility. We'll find out soon enough—both consoles are slated to launch at the end of the year.