i thought it lowered the price to compete with the wii!!!!
oohh microsoft u deceive thee agayn.

I'm not even sure these massive price cuts can save the 360 from the inevitable down fall to third place. The market has spoken and it will be the PS3 with the lead by a decent amount.

I'm not sure that I understand what you are trying to say (NOT trying to flame you); are you suggesting that MS should NOT lower the price of the box, or simply that lowering the price of the box will have no affect?

Clearly, recent sales history have shown that in "Others" the demand for the PS3 is far ahead of the 360. The demand for both is tepid in Japan, though again the PS3 has seen larger demand their as well. Demand in the Americas has been pretty close and I expect that the price cut here WILL affect that.

What I don't understand then is, what is MS to do? Maybe stop producing the box because demand world wide is less than the PS3? In my opinion, they are simply responding to a changing market place, just as Sony did when demand for the PS3 was lagging.

I can understand that some folks don't want MS to succeed; heck I owned all three systems last gen and wont pretend that I didn't have a favorite. I just wonder, if you were in charge of the 360 product line - what would your strategy include, if not lowering prices?

This should be the topic of an entirely different thread, because I don't think many will answer this question.

To answer the original question, I think MS could compete if it didnt lower its prices but it would be a competetion where a big release on Week A will push the 360 ahead of the PS3 for Week A while Week B will prolly see the PS3 moving ahead again.  Now obviously lowering the prices especially levels the playing field and makes the 360 a lot more competitive. Lets face it the closer the price of the 360 is to the PS3 the worse sales will continue to be for the 360. The PS3 has more things to offer via hardware than the 360 does. While that has been the double edged sword for them this gen (starting price point 600 USD) it will also help them in the end.

To the point of games this year i've questioned Microsoft's strategy a bit since it hardly released any exclusives and has had a drought imo. While big multiplatform games came out such as GTA, BF Bad Company, Rainbow 6 and others, there have been few 360 exclusives released to get more ppl to gravitate to the system. I think that has caused a bit of a dry spell for the 360.

@Skeeuk Now yesterday you called the 360 price drop desperate which I do not agree with. Now looking at the only real price drop in 3 years it seems to be on track at a regular financial cycle. It may seem desperate that while the the 360 sales have slowed down some that they are just now reducing the price. But how long has the 360 price point been the way it is and the PS3s price point been the way it is? Now it would be desperate if when the 200$ PS3 price drop occurred then 1 month later the 360 price drops. That would seem desperate to me. But they didnt, the 360 kept the same price. Considering what the price points were for each console when the PS3 released, this price drop seems to be directly in stride with what the price point needs to be at to get more sales.

Also with the original 200 USD price drop of the PS3 and and if that price drop of the PS3 happened this year (theoretical but I doubt its going to happen) that would be 2 price drops in two years totaling at least 250 dollars assuming the next price cut will be 50 dollars at least. Cutting the PS3 price now would seem desperate and IMO a bad business move since it sells great as is. Now if the 360 price cut ends up boosting its sales significantly than a price cut along with a possible GOW 3 release in Q1 2009 (theory) would be a great business move without looking desperate as they get the bigger money off the consoles sold during the holiday season and the generate more software/hardware sales during the first of the year.

With these comparisons I do want to know why you think the price cut is desperate Skeeuk. This is not a knock against you or your opinions, just a healthy debate.

@Tigawoods

Very nice and unbiased analysis.

I don´t think I´ve seen this level of competition since the SNES vs Genesis.

I wanna know when $50 became such a big that the opening post could say that the 360 is "much cheaper" 3 times and throw in a 'PS3 is much more expensive' to boot in such a short post. $50 doesn't even fully pay for one HD game. MS needs the price drop just to let people know that their product is cheaper at all, because most people don't see a significant difference between $350 and $400, and most people wouldn't touch the Arcade because it's an inferior piece of hardware.


That said, anyone expecting a miracle from this price drop should tone it down a bit. The Arcade at $200 simply isn't going to do it, as most consumers simply don't want that product. If the consumer as a whole sees the $400 PS3 as a better deal than the $350 X360 pro, just imagine how little value they assign to the arcade. They might be in under the sweet spot (which has really been $250 since the iPod took off), but they are only offering a gimped product at that price. A lot of consumers aren't even going to think twice about buying the Arcade. Really, the only audience that might get lured in by it en mass is the audience that wants a Wii instead.

360 sales will not be taking off much from here, though they will probably win a few more weeks in NA through the holiday season. It won't ever "take off," as it has really done about as well as expected. This year is the system's peak/plateau, and while they may do virtually the same business next year after that it's going to be a fairly rapid decent.

It seems to be desperate because MS lost Japan and Europe so quickly and they have lost NPD every month but one in 2008.  They have already had price cuts in Europe, Asia, and North America once this year and now they are about to cut prices again.  Unfortunately, they have tied their value proposition to price.  It will be an embarrasment if the Wii continues to dominate the 360 at a $50 higher price point.  MS seems to be in a downward spiral and their only solution is to cut the price.  If this round of price cuts doesn't work, they are in deep trouble with the xbox line.

dbot -

If Microsofts move is desperate, what was Sony's move last November?