| Jandre02 said: They are turning profit in the gaming department (think Halo 3, XBL) but I doubt their console is profitable. They can't drop each console $100, which is the only price drop I would deem significant. They will drop the Premium to 250-299, eliminate the core, and drop the elite to 350-399. I highly doubt that it costs them less than $300 to make each Xbox360. They won't drop too far below the Wii, which won't have a price drop for a long time. That will make it seem like the Wii is worth more than the 360. They may add games or controllers, but they won't drop the price of the core. |
I suspect that they are profitable at the moment, especially if you ignore the RROD warrantee issue (which most believe is why there was no significant price drop this year).
We know that improvements in technology and economy of scale allows the costs of consoles to drop the longer they are manufactured. We can be pretty sure that the 360 didn't sell at nearly the same loss margin as the PS3 (business week put it at $125 http://www.businessweek.com/technology/content/nov2005/tc20051122_410710.htm) , and as I recall, Sony claimed that they had roughly halved that loss by the middle of the year, probably more when you introduce the new models, and that allowed them to drop their prices.
The 360 has now been on shelves for over 2 years, and has shifted to a newer, cheaper model, with only a marginal price cut, the odds are very good that at least some of their models are profitable, or at least breaking even. Now this may change if MS brings in a substantial cut, but not so long as the price remains at current levels.
As to the extent of the cut, remember that even though the XBox launched with a similar deficit, MS was willing to drop the price $100 just 7 months after its US launch in order to match the PS2. It's now been over 24 months since the 360 launched, and likely another 2-4 months will pass before a price cut is announced. At this point, the XBox was down to just $180. If it were me, and I were trying to do an agressive push to keep Sony back on it's heels, I'd strongly consider a new pricing scheme of Arcade for $199, Premium for $249-275, and Elite for $350 (though personally I'd consider scrapping the Arcade price point all together). That would put the 360 in the Wii's price range, and well under the PS3s. While this would not force the Wii to cut price (which they could do painlessly), it could force Sony's hand and severely hurt their bottom line.
