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Forums - Sales Discussion - Predict the effect of the 360 price drop. Will it be outsell PS3 again?

NJ5 on 03 August 2008

@cleveland124: Let's just agree to disagree, after all it's not long until we'll see who's right. Even if Sony does cut PS3's price by $50, that's not as significant as 360's price cut. One of the models is getting its price cut by $80, furthermore a $50 cut is, relatively speaking, bigger for 360 due to its smaller price.

 



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Skeeuk on 03 August 2008

we will have to see with the new 80gig ps3, when its properly on sale, i think in NA ps3 will be lower again this week.

but once 80gig ps3 and new 60 gig 360 is on sale, it will be interesting to see the figures



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cleveland124 on 03 August 2008
JaggedSac said:

Quotes are from Mr.Stickball's news story on the front page.

"1) At launch, the Xbox 360 costs approximately $525 in parts to make a unit - Roughly 24% over the price of a standard $399.99 USD Premium model.

2) By November 2006, that price, according to iSuppli had decreased by nearly 40% - From Approximately $525 per unit to $323.90 per unit for the Premium model, and under $280.00 for the HDD-Less Core model (which is now the Arcade).

3) Since then, Microsoft has made 2 major revisions to the Xbox 360, the 2nd heatsink, and the cost-cutting 65nm archatcture of the Falcon revision. According to DailyTech, the Falcon revision cut CPU manufacturing costs by 50%. "

The price of the console only needs to have dropped $80 in 2 YEARS for them not to be losing money.  I think M$ will be alright.

1.  Key word is parts.  Other manufacturing costs dealing with the hardware are manufacturing facility overhead, line worker wages, warranty costs, R&D (redesigns aren't free), shipping costs, and storage costs.  I'm sure these are more than insignificant.  Also, I'll give you the benefit of doubt and say the $525 is accurate but nobody really knows what Microsoft pays for parts.

3.  Wouldn't the 2nd heatsink add cost?  And if your earlier #'s are correct the initial CPU cost was $106.  After the 40% revision savings that would lead to $63.60 for a CPU.  Another 50% savings would only save them $31.80.  In 2007, even if we exclude the $1.3 billion that Microsoft added for additional warranty costs, they lost $1 billion in the games division.  This division has Zune sales as well as the software sales for the xbox.  So  even if we assume they made no money on the Zune or software sales that means they lost $1 billion in hardware alone for the 360 just last year.  $1 billion /10 million 360's sold tells me that they were losing $100 unit last year.  Did they pick up $180 a unit in manufacturing savings this year?  But honestly I don't care anymore.  Back to what this original post was about.  Wii will be unaffected.  Xbox sales will increase 10-20% week until the holidays.  If PS3 matches with a $50 price drop the xbox sales will stay 10-20% stronger as will PS3 sales.  If not xbox sales will jump 25-35% and PS3 sales will drop 10%.  These percentages would be multiplied over the holiday season since sales pick up substantially at the holiday times.