Microsoft working on Price Competition for "PS3 Spring Price Cut"

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Groucho said:

WiiStation360 said:

Groucho said:
You guys need to stop the smoking stuff from under the kitchin sink, if you think MS will cut the price of the Arcade this year. The Pro, maybe. The Arcade, no way.

Someone bust out some iSupply numbers (or anything) that shows us how the Arcade could get a serious pricecut without putting MS in severe financial duress. I think we'd all love to see it and analyze it.

I agree the the Arcade is not making MS any money on hardware sales.  I disagree that any 360 pricecut could put MS in financial duress.

 

Say that the arcade model is breaking even right now (unlikely, I think, actually).  Then say that the price drops to $170.

 

$30/unit * say "10 million" units sold 2009.  That's $300 million USD.  Heck, if MS dropped the price that low, they'd probably sell 15 million units -- $450 million USD loss.  Stockholders would riot until MS closed their games division after this "successful year" for the 360.  MS would have to pretend it was R&D expense... and then stockholders would riot and ask "why are you pulling a PS3 for the next gen?"

I'm trying to define my definition of "duress" here for you, so you understand why I think an Arcade pricecut is so unlikely.  While MS is very bright, from a strategic standpoint, they still aren't going to have their stockholders abandoning MS stock and putting the company under to support "competitive pricecuts".

If they do anything, they will cut the price of the Pro to $270 or $280.  That's all.

 

So you think they would sell 15million Arcades and nothing else? So their software sales would plummet as well? How does this work exactly?