What Does a $199 Xbox Really Mean? Is this the Beginning or the End?

[greenmedic88]

$199 is the "magical" mass market number that generates the most sales.

If the 360 doesn't see mass market sales at this price point, then there is little possibility the platform will ever expand beyond its current niche.

I do believe at $199, MS is taking a decent loss on every hardware unit sold, but this could be interpreted in multiple ways.
- Recoup losses on a percentage of units through sales of HDD peripherals
- Sacrifice a limb to save the body: a price hit on Arcade sales at a mass market price leads to mass market sales, risking potential backfire.
- Clearing out the SKU after the 2008 holiday season as evidenced by additional HDD uses being implemented in the next firmware update (full installs on HDD, presumably full games on HDD in the future like the PS3).

I don't think this will mean the end of the Xbox if the strategy fails to generate mass market adoption; MS already has too much invested in the platform as a part of their "living room expansion" strategy.

Worst case scenario; MS abandons the game hardware business with the claim that consoles are soon to be obsolete, and that the future of gaming is Games for Windows. This was the same exit strategy they used with the collapse of the HD-DVD format (the future of HD content is in digital distribution: hard media is obsolete).