Xbox 360 Price Cut Dismissed

Next Generation is reporting that, despite comments from director of Xbox product management David Hufford saying that a console's 'sweet spot' is $199, Microsoft has no plans to drop the price any time soon. His comments came from a Bloomberg article we discussed last week. "Some are getting really spun up about the Bloomberg story and inaccurately reading tea leaves that don't exist. I spoke to Bloomberg nearly two months ago and we were talking about NPD data that had just been released, and chatting generally about price points of consoles in the market. The comment, which is accurately reported, unfortunately has now been taken way out of context and being reported as if I am signaling a price drop ... With Xbox 360s selling well at their current price point, Elites selling out at $479, and an insanely great portfolio of games in the market, there's no reason to announce any kind of price drop anytime soon."

I Disagree...because of the Wii

[epistemiclife]

I know that Microsoft perceives the Wii as being, essentially, for a different demographic than its own Xbox 360 consoles, but one look at http://www.vgcharts.org/ [vgcharts.org] shows that the Wii is catching up quickly. The fact of the matter is that many cost-conscious, non-casual gamers are getting cheaper Wiis, and might actually be satisfied enough to forgo paying $400 for a second console. Add to this the fact the third-parties flock to the console with the biggest installed bases and lowest development costs. If trends continue, the Wii will have both.

Microsoft had a healthy head start, and, in America, at least, it has the opportunity to expand upon it, before it is eroded by the Wii, as well as make things untenable for Sony. Complicating matters are the losses that Microsoft's game division has taken, recently. However, I think that it would pay off in the long term to make the Xbox 360 and unbeatable value, especially when compared to the ridiculously expensive PS3. It would seem that Microsoft is opting for a different, "safer" approach, however.

Re:Also, ANY price cut will not be telegraphed...

[Turken]

And not just price cuts... News of newer, better models will also publicly be denied until the time that company XYZ wants the news to be released.

Anyone remember Nintendo with the DS Lite announcement? Nintendo was vehemently denying all rumors (and a lot of rumors at that) right up to the day before they made their grand announcement of the newer model.

This latest series of rumors and denials does tell us something though: The price drop is coming, and it is coming soon. Like the early contraction pangs of a woman in labor, there are simply too many rumors and too much corroborating evidence for it to be otherwise. However, by constantly denying the rumors in public, Microsoft is able to keep the rumors from being published in the mainstream media as news. That is where the real damage would come. Hardcore gamers and geeks who follow all the gaming blogs and news sites have either already bought a 360 or are resolved to hold out for the price drop. It doesn't really matter too much if they catch wind of the price drop early. But for the sake of investors and the more casual gamers sitting on the fence and considering investing their money in the 360, Microsoft has to keep the rumor rumbles as quiet as possible for as long as possible.

Re:Also, ANY price cut will not be telegraphed...

[Anonymous Coward]

The continuing mass of 360s with hardware failures that Microsoft is having to spend massive amounts of cash to replace has delayed a price cut way beyond where it was needed. The 360 is selling at a slower rate worldwide compared to the first Xbox and appears to be bleeding cash at roughly the same rate.

There were interviews with 360 team members a year or so ago where they made it clear they no longer had the luxury to burn through billions like the first Xbox did. With the massive losses still looking to extend out for another year at least, adding on more red ink isn't an option for the 360.

With the 360 completely dead in Japan, and floundering in Europe, it is unlikely that the 360 will even reach the same installed base the first Xbox had after the same amount of time on the market. No price cut in the first two years, the unprecedented hardware failure rate, and major first party titles like Halo 3 and Forza 2 getting ridiculed by gamers show that Microsoft is stuck between a rock and a hard place in the console market.