How come people say the Xbox 360 can't have any more price cuts?

[StanGable]

Million said:

StanGable said:

One topic that has been in my head is this perception that the 360 "cannot have anymore price cuts." That's a typical defense line that PS3 fanboys use to claim that PS3 will begin outselling the 360 once it drops down in price. Let's be realistic though:

First the only real price drop that the PS3 has had is the one from $499 to $399. They had to alter the hardware and take out some parts to make this possible.

Now, let's assume the PS3 drops to $299, why then can't the 360 drop its Arcade version and turn the 360 into a $199 machine? It would be an non-existance price drop but to customers, the fact that the Pro takes over the Arcade version would make it seem like a price drop just like PS3 did when it got rid of their $599 sku for the $499 sku

Also, let's remember that Sony has been known to cut down hardware and making it slim to cut down on prices. Why would MS not do the same? That would give them the chance to once again drop the price and have perhaps the Pro 360 at the $199.

Anyway, I hope someone can enlighten me why MS cannot afford another price cut even though the possibilities are there to make it happen.

 

 

Well Miscrosoft could afford to pay people to take XBOX 360's but that's not really a relevant point , the point is what pricing strategy could microsoft employ to bring about a good balance of short & long term gain from the XBOX brand.

The 360 is already below the price of it's competetion in the form of the Arcade , further dropping the price of the XBOX 360 arcade or Pro reduces the perceived value of the console , maybe even to a greater extent than the price of the console . As we all know perceived value is important , it's what affects the strenght/viability of a brand.

To illustrate this point look at Gucci , they sell glasses for hundreds or even thousands of $ yet it might take them as little a $15 to make a pair , this is due to the perceived value of gucci brand . Gucci could substantialy imrpove their sales and their short term position for selling their thousand dollar glasses for a hundred dollars , but how would this affect the long term premium brand image Gucci has worked to achieve , it would certainly cheapen it and therfore damage it's ability to bring in the high profit margins it once did.

Obviously XBOX isn't a luxury brand but Microsoft don't want to one the risk of devaluing the XBOX brand , it isn't all about marketshare . If Microsoft drop the price of the 360 too greatly , too fast then the consumer will expect the price of the 720 to follow suit , they won't accept a premium priced 720 if the XBOX 360 is being sold for peanuts . However if Microsoft continue to apply the financial pressure to Sony they may put themselves into a position of greater marketshare , if all the traditional/core developers are supporting a unified platform that is Microsoft then it'll be irrelevant how Microsoft price their next console , but as long as Sony is around (their main competition IMO) Microsoft would be wise to balance their pricing.

 

 I like your answer, but I disagree that lowering the price reduces the perceived value of the console, in fact, I dare to say that here in the States the 360 already is perceived as good value, and a drop in price to us is just like a good sale. Let's take for example the PS2; the PS2 never lost its value due to price drop, in fact, because PS2 sales increased with it drop to $199 and to $150 thanks to the fact that people knew the PS2 was the console of choice. The same could be said with the 360, not only has it got a strong foothold in the market, a price drop would be like Gucci having a sale of their most expensive glasses at half the price, they're still top notch glasses and people would be more willing to buy it now than they would if the price stay the same. Plus I think it's harder to compare consoles to an worn accessory. The only way the 360 would start losing value perception is if the next generation comes out, that's when consoles stop selling as they used to.