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Forums - Gaming Discussion - Price cut - When/How Much

catofellow on 13 January 2007

I am going to guess that we will se a price cut for all three units in May. The price for all three console in NA will be.... Xbox 360 - $279.99 former premium bundle w/ HDMI XBox 360 - $379.99 120 GB HD, built in WIFI The XBOX 360 is hardest to predict. We know they probably are going to redesign the console, but how many SKU's are they going to keep? I am predicting that they will cancel the "core" bundle (if they haven't already, it appears to be "sold out" everywhere). Online is so important to Microsoft strategy so I don't think MS wants anybody to buy the thing. PS3 - 400/500 and both SKU's will remain as is. Sony needs large price cut to attract mass market, hopefully blue laser diodes will be less costly for Sony. Wii - 200 as is (250 dollar DVD unit released in September). Cut price too fast w/ Gamecube. Needs moderate cut to allow for future price cuts.



Lifetime Sales Prediction - 6/29/2013
Wii U - 38 million
XBOX One - 88 million
Playstation 4 - 145 million

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mkozlows on 13 January 2007

catofellow said: I am going to guess that we will se a price cut for all three units in May.
I guarantee you're wrong. There's no way the PS3 will get a price cut this soon after launch, not when Sony is already taking such a large hit on the units. It'd be seen (correctly) as a desperate move.
The XBOX 360 is hardest to predict. We know they probably are going to redesign the console, but how many SKU's are they going to keep? I am predicting that they will cancel the "core" bundle (if they haven't already, it appears to be "sold out" everywhere).
No, the Core bundle is critical for Microsoft as they cheapen up. One of the (many) difficulties they had in cost-reducing the original Xbox was the hard drive. What they discovered is that if you're buying a small hard drive to start with (which they were in both generations), your drive costs will never go down. Over time, you'll get larger drives for the same price, sure, but you won't be able to get a drive of any size for less than you were initially paying. This makes it awfully hard to sell a $129/$99 console at anything other than a loss. Microsoft knows that they're going to eventually be selling a console for cheap, and that in order to do that they're going to need a unit without a hard drive. That's why they created the Core console in the first place. At this point, with the 360 selling largely to consumers who don't mind spending $300-$400 for a game machine, the value SKU isn't quite as important; when it comes down to $129 vs. $199, it will be essential. If/when Microsoft comes out with an HDMI-enabled 360, it will certainly replace the existing Premium, and will probably appear on both Premium and Core units (because I doubt the added cost of the HDMI port would exceed the added cost of now having to manufacture two different pieces of circuitry, which they haven't previously had to do).
Wii - 200 as is (250 dollar DVD unit released in September).
It's hard to imagine Nintendo cutting prices on a unit that's selling so well and getting so much press. On the other hand, the Wii manifestly isn't up to the specs of the 360 or PS3 (I die a little on the inside every time I load up Zelda and partake of the Festival of Jaggies), and its value proposition really does depend on being the cheapest console. It's hard to imagine the Wii being successful if it costs more than the 360. But I suspect that, at the very least, Nintendo would give it a month or two to see how that played out, and then react if things dropped off a cliff for them.



catofellow on 13 January 2007

mkozlows said: I guarantee you're wrong. There's no way the PS3 will get a price cut this soon after launch, not when Sony is already taking such a large hit on the units. It'd be seen (correctly) as a desperate move.
Maybe I overestimated the price cut, but I guarantee that if Microsoft cuts its price, both Sony and Nintendo will respond in kind. Remember, the original XBOX saw a price cut in the same time frame.
It's hard to imagine Nintendo cutting prices on a unit that's selling so well and getting so much press. On the other hand, the Wii manifestly isn't up to the specs of the 360 or PS3 (I die a little on the inside every time I load up Zelda and partake of the Festival of Jaggies), and its value proposition really does depend on being the cheapest console. It's hard to imagine the Wii being successful if it costs more than the 360. But I suspect that, at the very least, Nintendo would give it a month or two to see how that played out, and then react if things dropped off a cliff for them.
I understand your doubt, but Sony sold over 20 mill consoles in 2002, close to Gamecube/Xbox lifetime totals. They still cut the PS2 price the following May. I still think that if Microsoft cut prices, PS3 and Wii buyers would sit on the sidelines waiting for their price cut. Nintendo and Sony's hands would be forced. So are you stating that noone will cut prices?



Lifetime Sales Prediction - 6/29/2013
Wii U - 38 million
XBOX One - 88 million
Playstation 4 - 145 million

Townzy on 13 January 2007

If 360's Price is cut this May, that is a full 1 year longer withoutout a price cut than the original xbox. 360 will see a 100 cut in Q2 2007. it may also get a different Sku in Q4 2007 (or seperat bigger HD) Wii does not need a price cut, it is cheap. when the 360 core is cut to 199 - 249. Nintendo will evaluate sales, if they see a significant drop in sales due to the 360 essentially being "cheaper". if thats the case Wii Sports will probably be discontinued as a bundled game and the price drops to $199 in Q3 2007 PS3 cannot cut the price, they are already losing 150 - 200 on each console o cut the price 100 would be suicide. but not too cut it could also be suicide. We should see a 50 - 100 thou, at the earliest Q4 2007



mkozlows on 13 January 2007

catofellow said: Maybe I overestimated the price cut, but I guarantee that if Microsoft cuts its price, both Sony and Nintendo will respond in kind. Remember, the original XBOX saw a price cut in the same time frame.
Microsoft WAS desperate. Remember the position that they were in with the original Xbox: They had no credibility at all in the console gaming world, lots of people were predicting that they'd abandon the market quickly, and they were up against the behemoth of the PS2, which had a solid head start and lots of exclusives. Sony's going to be desperate before this is all over, but right now, I doubt they're quite as intently focused on gaining credibility as Microsoft was. Remember too that Microsoft's desperation meant that it lost enormous piles of money ($4 billion!) on the original Xbox, by doing price reductions without cost reductions. That's fine for Microsoft, which makes its money by the bushel on Windows and Office sales -- but for Sony, for whom videogames have actually been a major part of their profit in the last ten years, subsidizing a money-losing gaming division is not a realistic option. Or to put it another way: With the original Xbox, Microsoft was happy to buy an extra 10% of market share for an extra two billion dollars. Sony won't take that deal with the PS3; they need it to start paying for itself at some point. Also, consider this: If Microsoft cuts prices $100, giving us a $199/$299 360, we're getting down now to the mainstream value sort of prices. If Sony "matches" this with $100 cuts, now they're at $399/$499, which is still shockingly expensive and roughly double the 360 price. It was important for the Xbox to match PS2 price cuts, because Microsoft couldn't be more expensive than the PS2. The PS3 will be more expensive than the 360 -- and a lot more expensive -- whether or not Sony cuts prices. Sony's hope lies in making people believe that the PS3 is somehow worth the phenomenal price premium, not in trying to match the price of the 360.
I understand your doubt, but Sony sold over 20 mill consoles in 2002, close to Gamecube/Xbox lifetime totals. They still cut the PS2 price the following May.
The difference between the PS2 and the Wii is that Nintendo is having severe supply shortages with the Wii. There's no point cutting prices if you can't keep up with current demand. Obviously, by May this should have slackened significantly, but still. Until they're piling up unsold, Nintendo won't do anything; that's why I said they'd likely wait a bit after the 360 price cut to make their decision.
So are you stating that noone will cut prices?
No. The 360 will absolutely get a price cut this year. I'd guess $100, but it might be $50 and a spec upgrade (HDMI and/or larger hard drive). The PS3 won't follow suit unless sales are absolutely disastrous. Nintendo will be much more likely to match the price cut, but won't be eager to do so immediately. That's my prediction, anyway.



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mrstickball on 13 January 2007

I think a price cut could come as early as Febuary with Crackdown on the 360...Who knows though. However, I DO believe that MS could easily drop the price at any given point. In Nov-Dec, retailers had huge bundle deals on 360s with upto $100 in gift cards with a purchase of the 360. That tells me MS (atleast during Christmas/Thanksgiving) has the ability to lower the price. Now, if MS actually does it or not is the question. IMHO, MS needs to drop the price of both systems ASAP by $100. Get the core to $200, and your going to see HUGE sales. Heck, I'd just get rid of the premium, offer HDMI on the core, add the wireless controller, and then just offer the HDs separate - since that's all a premium really has on it anymore. The most important factor is price - Having a 360 with the huge library of games @ $200 is SIGNIFICANT. Look at Japan - With the rather large price drops and pack-ins with Lost Planet and Blue Dragon, the 360 has gone on to sell over 100k units in December and in it's FIRST WEEK in January already outsold the 360 in its first TWO MONTHS in January....Do the same worldwide and offer the core for 199/299 euros or even less (How about 169/269 euros?). The sooner MS lowers the prices, and should none of the compeditors lower their prices, the 360 will easily win the generation (atleast everywhere but Japan). As for Nintendo: I think the price is fine. Nintendo is making a KILLING on each Wii, and will only make more....Keep the price and drop it at Christmas to $150USD w/o a game packin. For Sony, a price drop will help somewhere in the year - preferably right after they switch to 65nm. I believe that will reduce the costs of the PS3 significantly. That should enable them to drop the price $100 and possibly lose less money per console. I think the schedule SHOULD look like this: Xbox 360: $199/$299, 169/269 euros, 25,000y/35,000y (or less) in Febuary with Crackdown in the US/Europe, and then the J-drop as soon as IdolM@ster comes out later in January. PS3: $399/$499 ect ect for other regions in October with GTAIV. Big boost to sales. Wii: $175, 17,500y, 149 euros just before thanksgiving...Maybe even include a coupon for $10 off the next Super Smash Brothers iteneration.



Back from the dead, I'm afraid.

Stromprophet on 13 January 2007

1) 360 will not price cut unless Wii or PS3 outsells them on a monthly basis in the US. 2) The new "unit" being discussed has a lot of other stuff in it, 120GB hard drive (possible, no indication if that's true), HDMI port, I don't ever recall anything about Wifi capibility. 3) the new unit would not be cheap, Wifi, HDMI, and a 120GB compact drive are all expensive ticket items. Even on the PS3 currently using these they add parts costs over 100 dollars easy. 4) I do see a price cut for PS3 in the European launch or sometime after the launch with a refund offer to Europeans. Just like Box did when they launched in Europe. So yeah, price cuts all around. It won't be more than 100 dollars for the PS3 or 360, I doubt if it's that much. Remember, the M$ product is still recovering costs, it's still in the read overall by a couple billion dollars. I don't think M$ is willing to lower the price that much. Also remember PS3 loses 230 bucks on the 60GB unit, it's going to be hard for them to lower the price by much either.



catofellow on 13 January 2007

I think everybody is missing some key points. 1. April sales are not like December sales, there is a significant slowdown in April every year. 2. PS3, Wii shortages will no longer be a problem come May. 3. Consumers (like me) are waiting for price cut, if one company cuts its price, the others will follow so people don't wait on the sidelines or buy the other console they see in the news. 4. Microsoft cut the XBOX price in May 2002 before Sony did. Well not really, if you remember Microsoft scheduled a press conference to announce the price cut, and then Sony put together a last minute press conference a day before Microsoft to announce a price cut of their own. Sony did this to act like it was the leader and Microsoft the follower, but in reality Sony scrambled to make the announcement first because they didn't want to allow Microsoft to convey a position of strenght. It was not desperation on Microsoft's part, XBOX was doing much better than Gamecube in the U.S. at the time. 5. Why would Microsoft wait until PS3 is outselling 360? At that point a price cut is too late. Their goal is to stay ahead of Sony, not let Sony dictate their moves. A Microsoft price cut forces Sony into greater losses. Isupply estimates that XBOX premium costs $323 as of November. Microsoft can afford at least a $50 dollar price cut. http://www.isuppli.com/news/default.asp?id=6919



Lifetime Sales Prediction - 6/29/2013
Wii U - 38 million
XBOX One - 88 million
Playstation 4 - 145 million

robjoh on 13 January 2007

catofellow said: I think everybody is missing some key points. 1. April sales are not like December sales, there is a significant slowdown in April every year. 2. PS3, Wii shortages will no longer be a problem come May. 3. Consumers (like me) are waiting for price cut, if one company cuts its price, the others will follow so people don't wait on the sidelines or buy the other console they see in the news. 4. Microsoft cut the XBOX price in May 2002 before Sony did. Well not really, if you remember Microsoft scheduled a press conference to announce the price cut, and then Sony put together a last minute press conference a day before Microsoft to announce a price cut of their own. Sony did this to act like it was the leader and Microsoft the follower, but in reality Sony scrambled to make the announcement first because they didn't want to allow Microsoft to convey a position of strenght. It was not desperation on Microsoft's part, XBOX was doing much better than Gamecube in the U.S. at the time. 5. Why would Microsoft wait until PS3 is outselling 360? At that point a price cut is too late. Their goal is to stay ahead of Sony, not let Sony dictate their moves. A Microsoft price cut forces Sony into greater losses. Isupply estimates that XBOX premium costs $323 as of November. Microsoft can afford at least a $50 dollar price cut. http://www.isuppli.com/news/default.asp?id=6919[/quote] First of alll, pardon for my bad english it is not my native tongue. I think you miss some key feuters in a price cut. 1, If microsoft did a price drop today it would disapere in media or be seen as a sign of failure. The xbox360 is doing fine for the moment it has started to sell some in japan, of the next-gen machins it is leading in USA and Europe. In USA it is outstanding. 2, Sony do not have the room for a price cut, the ps3 is simple to expensiv. I do not think it need one either. Sure it is a expensive kit but with the production problems they have and that en EU launch is first in mars I do not see the big problem, and most of all their old cash cow ps2 is still selling wery well. Here in Sweden it outsold both the Xbox360 and Wii with an order of three to one the week before christmas. Sony will most probarbly use the ps2 as there "party" machin for at least one more year. A price drop now is unnecessary because the ps2 is going so well, thank Guitarr hero, buzz and singstar for that. 3, Nintendo has absolut no need for a price cut now. They are selling everything they can produce. And if we should be honest they only have three good games: Wii sport Zelda and Red Steel. Mayby Wario but it isn't a systme seller. How many Nintendo fans do you think will jump over to Wii when Metroid, Super Mario Galaxy and most of all SSMB is coming out. In Japan, Wii will probarbly be selling out simple because people that want a DS will by a Wii also. Here in Sweden there is so many pre-booked system now that some internet stores are talking about 2-3 months of delivery time. Nintendo has stated that their goal of delivering is what the can produce. So I don't see that they need a price cut yet. Actulay some stores is selling the Wii for more than the Xbox360 now. Summing it up I would say that neither of the companies need a price cut. Microsoft is selling well in both USA and EU, is now starting to sell some consols in Japan. Nintendo and Sony can't delivere anyway so why should they care? And as a final point here in Sweden is the Xbox360 premium already costing half of the sony ps3 launch price (3200 SEK against 6300 SEK, 7 SEK ~ 1 USD). A price drop wouldn't change a thing.



 

 

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catofellow on 13 January 2007

robjoh said: I think you miss some key feuters in a price cut. 1, If microsoft did a price drop today it would disapere in media or be seen as a sign of failure. The xbox360 is doing fine for the moment it has started to sell some in japan, of the next-gen machins it is leading in USA and Europe. In USA it is outstanding.
I do not understand this rationale that lower prices imply inferior products.
2, Sony do not have the room for a price cut, the ps3 is simple to expensiv. I do not think it need one either. Sure it is a expensive kit but with the production problems they have and that en EU launch is first in mars I do not see the big problem, and most of all their old cash cow ps2 is still selling wery well. Here in Sweden it outsold both the Xbox360 and Wii with an order of three to one the week before christmas. Sony will most probarbly use the ps2 as there "party" machin for at least one more year. A price drop now is unnecessary because the ps2 is going so well, thank Guitarr hero, buzz and singstar for that.
Remember that Sony is supplying the optical drive, and possibly many other parts to the machine. It will be able to cut prices faster than its competetitors.
3, Nintendo has absolut no need for a price cut now. They are selling everything they can produce. And if we should be honest they only have three good games: Wii sport Zelda and Red Steel. Mayby Wario but it isn't a systme seller. How many Nintendo fans do you think will jump over to Wii when Metroid, Super Mario Galaxy and most of all SSMB is coming out. In Japan, Wii will probarbly be selling out simple because people that want a DS will by a Wii also. Here in Sweden there is so many pre-booked system now that some internet stores are talking about 2-3 months of delivery time. Nintendo has stated that their goal of delivering is what the can produce. So I don't see that they need a price cut yet. Actulay some stores is selling the Wii for more than the Xbox360 now.
Nintendo's will have an ample supply of consoles come May.. They have launched worldwide and will lose credibility especially if Microsoft undercuts their price. Once Microsoft and Nintendo cut their resprective prices, sony will be compelled to cut prices as well.
Summing it up I would say that neither of the companies need a price cut. Microsoft is selling well in both USA and EU, is now starting to sell some consols in Japan. Nintendo and Sony can't delivere anyway so why should they care? And as a final point here in Sweden is the Xbox360 premium already costing half of the sony ps3 launch price (3200 SEK against 6300 SEK, 7 SEK ~ 1 USD). A price drop wouldn't change a thing
This is not OPEC. Each console manufacturer knows that if they cut the price of their consoles, sales would go up. That is the goal by the way. The belief that technology somehow works opposite to the rest of the capitalist system (its price is high, therefore it must be the best! i wanna buy!) is insane. I submit to you that Turbo Grafix 16 won the 16 bit generation using this rationale. Using this logic also makes you wonder why anyone bothered to cut prices last generation, nearly every year in Sony's case.



Lifetime Sales Prediction - 6/29/2013
Wii U - 38 million
XBOX One - 88 million
Playstation 4 - 145 million