US price cut 'only feasible option' for Microsoft Options

[Xbox-Scene]

US price cut 'only feasible option' for Microsoft Posted by XanTium | March 14 23:35 EST | News Category: Xbox360

From gamesindustry.biz: [QUOTE] In the wake of Microsoft's announcement at the beginning of this week that it was cutting the price of the Xbox 360 across Europe, The simExchange analyst Jesse Divnich believes a similar move in the US is the company's "only feasible and economic option" to combat Sony's PlayStation 3 momentum. "Whether there is an Xbox 360 shortage or not, it is clear that the PS3 has gained considerable ground on its rival," he said, as the impact of last year's PS3 price cut and Sony's Blu-ray victory become clear. "Given these past two months and the momentum that the PS3 has gained, Microsoft must react quickly as the PS3's momentum will only get stronger until Microsoft reacts." [/QUOTE] Full Story: gamesindustry.biz

[0794]

"only feasible option" is quite a drastic and extreme phrase, and MS is in no absolute position to have to make a price cut. that being said, they easily can and should now to spur an increase in sales.

i find it interesting that some are making this PS3 selling more than the 360 over the past 2 months into such a big deal. the 360 was out an entire year in advance and has had more time to saturate the market. however, the ps3 does have more momentum relative to the 360 as far as time from release date sales.

also - no one mentions the fact that the 360 has outsold the ps3 in america 11 million to 4 million units...

[Flagg3]

Actually, it is pretty drastic. Microsoft likes to tout that they have a larger installed base, and more quality games, etc. - But that goes without saying because the Xbox 360 had an entire year's head start.

It's actually a very bad sign for Microsoft if the PS3 is outselling the Xbox 360 despite the fact that it's at a higher price point and before it's 'killer apps' MGS4, and even the multi platform GTA IV are released. I have to admit, I'm actually a bit stunned myself that Microsoft didn't get a bigger hardware sales boost from Halo 3, because that was the biggest gun that Microsoft had in it's arsenal, and no other release will spur hardware sales as much as a premiere Halo 3 would.

The simple fact is that at the $399 price point, the PS3 offers a much better value from a purely hardware perspective than any model of Xbox 360. Microsoft has become so obsessed with hardware profitability for this generation that they may be shooting themselves in the foot. When you factor in the cost of rechargable battery packs, charging stations or cables, the wireless adapter and the ever increasing need for more storage than the anemic 20GB that is offered on the pro system, it is very obvious that the Xbox 360 does not represent a good value anymore when compared to the PS3, even if you were to ignore the reliability and noise.

The simple fact is that Microsoft desperately NEEDS to drop the price of the hardware AS SOON AS POSSIBLE. They also need to bump the size of the hard drives on all versions. The fact that consumers are unable to cheaply upgrade the hard drive themselves combined with Microsoft aggressively pushing people towards multi-gigabyte downloads of HD content and original Xbox games, The Pro with only 12GB of usable storage is becoming increasingly less and less viable.

The whole reason that Microsoft was so desperate to launch early was to gain enough momentum to build a sizeable enough lead to become the market leader before Sony was able to gain any footing. The way things are looking, if Sony starts to outsell Microsoft now, that 7 million unit lead could be gone in less than a year. However, if Microsoft were to aggressively lower prices and increase storgae space, that could definitely shift momentum back their way and help to reverse the sales trend back in their favor.

Frankly, I just can't see Microsoft ever getting the sales lead back at the current price points. The sooner they drop prices, the better.

[Giga_Death]

I think a combination of not only price drop but other factors (storage size, 65n cpu) would help.

i find it interesting that some are making this PS3 selling more than the 360 over the past 2 months into such a big deal. the 360 was out an entire year in advance and has had more time to saturate the market. however, the ps3 does have more momentum relative to the 360 as far as time from release date sales.

also - no one mentions the fact that the 360 has outsold the ps3 in america 11 million to 4 million units...

If the difference in sales is as small as jan/feb, plus the xbox starts outselling PS3 again that 11 million lead won't go down and maybe go up more depending on how they play their cards.

[sirsmacketh]

i believe the timing of this price cut to be pretty interesting. Everyone knows that microsoft is working with ATI on shrinking the size of the GPU. Smaller component sizes just means lower manufacturing costs. It seems everytime there's a change on the 360 mobo, a $50 price drop follows. With the plans of integrating the CPU and GPU onto the same die, just think of where the 360 will be price wise compared to the PS3.

Now that Blu-Ray has won the HD war, you think SONY has any reason why to drop the PS3 price now? Or for that matter, any Blu-Ray player?

I dont think Microsoft is hurting in the gaming division - lets just see how this plays out for the rest of the year.

[Chancer]

360 is already a cheap machine. I don't see why MS need to make any sudden panic moves at all.

[Joystick12]

The 360 has been out long enough that it could use a bigger price cut. When the PS2 launched it was at what, $400? I could be wrong on that, but I remember within a couple of years it was down to $150. They need a bigger boost, more than $50 off a Pro console.

[crapoid685]

also - no one mentions the fact that the 360 has outsold the ps3 in america 11 million to 4 million units...

Subtract the one year head start and make it a level playing field. It's pretty easy to have a lead when MS sold their console for a whole year before one PS3 was available for purchase. It's Sony's fault for not releasing the console when the 360 came out, but those numbers are heavily skewed. Better yet, they made the right choice by actually having their hardware issues completely worked out before releasing to the market. They did not put garbage on the rack and then have to increase their warranty by 3 years and lose $1 billion, and Sony won't be fumbling around the third year into the PS3 life cycle still trying to work out hardware issues. By that time in the PS3 life cycle, we should see a PS3-mini or something like that.

[bucko]

The PS3 is gaining momentum because Sony can actually produce them, MS should have solved there stock problems by now perhaps there waiting on Jasper?

[Martinchris23]

MS need to ensure that the 360 becomes a reliable console - this is why sales have flagged. They have done well to turn around the current issues, but the stigma will remain for some time. A fair number of people are holding off buying a 360 until there's some assurance their console won't die on them.

[Mr Invader]

360 is already a cheap machine. I don't see why MS need to make any sudden panic moves at all.

IMO, compared to the PS3, it isn't. The PS3 has Blu-ray, built-in wireless, and 20 extra gigabytes of HDD space for only $50 more than the Premium SKU. Of course the 360 does give you the options of paying for it later if you need it. Looking at what each console does and how much you pay for it, the Wii is actually the most expensive out of the 3.

{Core =$200 Premium =$300 Elite =$400 FTW}

[BiNiaRiS]

IMO, compared to the PS3, it isn't. The PS3 has Blu-ray, built-in wireless, and 20 extra gigabytes of HDD space for only $50 more than the Premium SKU. Of course the 360 does give you the options of paying for it later if you need it. Looking at what each console does and how much you pay for it, the Wii is actually the most expensive out of the 3.

{Core =$200 Premium =$300 Elite =$400 FTW}

i'm sorry...but who buys a console based off of features. imo the ps3 is still heavily lacking on exclusives. there are a few games i want a ps3 for but not enough to waste my money on an extra system. even with some of the new games, eg mgs4 coming soon it still doesn't sway me enough to warrant an additional console purchase. and the fact alone that the ps3 cannot and will never be able to output DTS-HD audio makes it a worthless bluray player for me. i'll be buying a standalone just because of that.

the 360s were nowhere to be found in January/February. i was looking for one and time and again store employyes told me..."we haven't had any for weeks and in our last shipment we only got 3 of them." give it some time. remember the ps3 is JUST now becoming a system that is economical. and look at the userbase. i'd like to see numbers like how many ps3s sold this month were to user that already owned an xbox 360, how many that owned no console, etc. that would give us a much more accurate picture.

[axess68]

I agree. They should do a price cut soon. $200 Arcade, $300 Premium, $400 Elite... as was mentioned before, is very reasonable. The PS3 is gaining a lot of ground. MGS4, Resistance 2, GTA IV, Killzone 2.....all will sell systems.

Sure, GTA IV isn't an exclusive. But, it WILL sell systems.

Price cut soon, Microsoft. You really have to make up for the bad press about the Red Lights of Death.

[Chancer]

IMO, compared to the PS3, it isn't. The PS3 has Blu-ray, built-in wireless, and 20 extra gigabytes of HDD space for only $50 more than the Premium SKU. Of course the 360 does give you the options of paying for it later if you need it. Looking at what each console does and how much you pay for it, the Wii is actually the most expensive out of the 3.

{Core =$200 Premium =$300 Elite =$400 FTW}

I'm not comparing it to anything. For what you get for your money and the vast array of titles you have access to, it is not a high cost item at all.
Human nature says people will always want cheaper and cheaper. Cheaper means corners get cut here and there. the 360 can ill afford to have any further hardware issues caused by cost cutting.

[axess68]

I'm not comparing it to anything. For what you get for your money and the vast array of titles you have access to, it is not a high cost item at all.
Human nature says people will always want cheaper and cheaper. Cheaper means corners get cut here and there. the 360 can ill afford to have any further hardware issues caused by cost cutting.

Well, since hardware prices are always dropping, and the cost associated with the 65nm CPU and GPU's lower than the original cost of the hardware for the 360, it evens out.

I don't think Microsoft would take such a huge hit by lowering the price by $50 or so while implementing the newer, cooler, cheaper CPU and GPU.