| Grampy said: They must be a little careful. Excessive price cutting when not in response to competitive cuts can be seen as a sign of weakness and cause a decreased value in perception. In fact I think MS hurt themselves already by becoming cheaper than the Wii without improving their position. |
Why? The Xbox 360 isn't considered to be as good value by many people as the Wii so the Xbox 360 has to be cheaper in effect to sway many of those potential customers.
At Topic:
Microsoft knows Sony is going to cut the price next year, so if they act first they can take the wind out of any momentum Sony may get with their own price cut. Essentially another price cut early in 2009 and they'll walk away with the U.S market between the HD consoles and severely weaken Sonys current and future financial position in the market.
Every console they sell, especially the Premium and Elite SKUs is probably worth $20 a year on average from Live revenues. So if we consider the fact its taken 4 years for the people to finally adopt the console it should take another 4 years for them to move onto another console so theres $80 of eventual revenue to go alongside any accessory and Live purchases as well. Furthermore each console will probably sell on average 10 games in those four years and thats another $60 of expected revenue @ $6 royalty per game. Furthermore once they get these people involved in the Live community the chances are they will upgrade to a Microsoft console next generation, so for many reasons aggression is very much warranted at this point to secure future profit and perhaps a strong position for the next generation.
Tease.
