Give us a scoop insider.

What everyone seems to forget is that Microsoft like Sony uses a loss leading model. The 360 started out this generation as a loss leader. Only later due to cost reductions, alternate revenue streams, and frugal price point retention did the consoles hardware became profitable out of the box. Historically speaking Microsoft has no issue with under cutting their manufacturing costs to gain market share. Especially since they turn the corner on losses ridiculously fast. Further more the acquisition of this technology goes beyond the console alone. Microsoft will undoubtedly marry its software prowess with the proprietary technology to make this a standard technology for other products such as televisions, and on the computer side of the equation. So it will probably become a interface boom for the company.

No what is really going to decide the retail price of this product is tried and true supply and demand. Which is how many units Microsoft can bring to market compared to demand. The lower the demand, the lower the price. The higher the demand the higher the price. Say if Microsoft can only bring seven million units to market, and their focus testing shows that the peripheral is going to sell to one in four console owners then regardless of the price they are going to run out of the product. So why voluntarily lose money on the price point. On the other hand if the testing says they will not sell out of the product without a low price then that is what they are going to need to do.

Analytically speaking the price isn't a indicator of a good or bad move on the part of Microsoft. Nintendo basically put a motion control on a slim Gamecube which is thoroughly dated technology with almost no online features, and they were able to sell the console for $250. Nobody today gripes about Nintendo overcharging consumers. There isn't going to be a good or bad move here. What the price is going to tell us is how much demand Microsofts own focus testing has found will be for the peripheral.

There is really going to be a correlation between the price point of the product and the demand. Well unless Microsoft can churn them out which they don't have a good track record of being able to do consistently. Anyway that is why Microsoft is being cagey about the price. No it isn't because it will be bad they are just testing to see what price the market will bare out.

That may be true Dodece, though sometimes you can have a rabbid fanbase that races out to pick up the product at release and then sales taper off rather quickly.  How would those fans feel if MS just turned around and cut the price so close to launch? I don't know that pre-order numbers is always a good indicator for pricing a product on. 

I don't see why this thing is costing them so much to make. there really isn't that much too it. 4 mics, 2 special cameras and 1 sd camera. 

ps casing and cords as well 

maybe it because they blew lots on marketing and getting celebs to say THEY LOVE IT, THAT KIND OF MARKETING IS NOT CHEAP YOU KNOW BUT STILL IF YOU WANT KINECT LIKE FUCTIONALITY SAVE YOURSELF BUY A PS2 AND A EYETOY, BECAUSE SO FAR GAMEWISE KINECT HAS SHOWN NOTHING NEW

oh I'm sorry is your trusted "source" better than mine.  Mine walks on four legs and purrrs when I feed it tuna, but I won't reveal her identity either.

Possibily, but why would M$ charge $150 unless the production cost was somewhere in that region. unless of course they're planning to make huge profit on each unit solid. logically it dosent make sense because they're already competing with the Wii and Move, why not undercut them...

Sony and Microsoft have followed a loss leading strategy on the initial sale of their systems, but they turn a significant profit on their add-ons and accessories; and I suspect most people would feel ripped off knowing how little their controllers really cost to manufacture. The reason they can justify this approach is that most people will buy a few first party games, several third party games, and enough accessories to justify the losses on the hardware.

While it is entirely possible that Microsoft will sell Kinect at a loss, with how few games will be sold per system and the lack of any controllers or accessories to go along with Kinect it would be a moronic strategy; unless (of course) Microsoft wanted it to be a massive financial failure.

@HappySqurriel

That raises the question as to whether Microsoft even considers Kinect to be a self contained venture. After all if the new peripheral drives up sales of consoles. Which is basically the whole point in the first place. Then those additional console sales can be where Microsoft would make back the loss plus the profit. Microsoft is very much about viewing their console as a portal more then anything else. Given the choice between the car and the road. Microsoft really wants to own the road. The way to get more road is to increase presence. So no I don't expect Microsoft to actually care about the product being profitable in itself. Just as long as it drives console sales much higher even for a limited period of time.

@Fumanchu

Honestly going on past experience rapid price reductions have zero impact on vested consumers. That may seem far from the most rational thing, but it is also the most understandable on a very basic level. Early adopters are more then vested financially. They also vest their self worth in these purchases. Thus they are emotionally tied to the success or failure of the product. So much so that it blocks them from critical self analysis. That my friend is Ego. Basically accepting that they were fooled would make them feel bad. So instead they choose to believe that with time their brilliance will be made clear. Further more by doing this they can draw out the pain until what they did doesn't sting, and they eventually accept that they were foolish. Basically the affect is so gradual, and prolonged that it is hardly even detectable. Look to the PS3 price slope, and posts in these forums to see what I am talking about.

Speaking to the mental process at play in their response. This response was both healthy and productive. Neither the thought process or the persons having them were at fault. The truth is that the human brain is designed to go through this very process, and without this process you would suffer greatly. This isn't just about self gratification for its own sake. Without the mind actively protecting the sense of self worth we would be emotionally unstable. The brain wants to cycle you towards a high sense of self worth, because that is where you are more likely to be productive, and much more likely to survive. Without this mechanism society would effectively collapse. So this was actually a very rational response. So I am not knocking on anyone even the early PS3 adopters. The truth is we all do this just about every day. We basically have to do this if we want to survive.

It will retail for £75 I reckon. Just to stay competitive.