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

[mrpapaye]

Dodece said:
One word for the group to consider motivation. You cannot argue that profitability is the only goal for both companies. Were that the case there would no longer be a Sony console, and Microsoft would not have spent billions on their previous console. The reality is that both consoles are the fulcrum of a struggle. Which allows for both players to easily spend more then they make in the hope that through dominance they will reap a long term windfall.

Microsoft wants more then to win the console war this generation. Given the current economic situation. Their strong financial status, and with the weakness of Sony they have an opportunity to push the competition from the market. A pricing war with Sony could drive the losses so high that Sony could be forced to leave the market. Giving Microsoft what it wants.

I know a lot of members that say that will not happen, but we need to be realistic. How much can Sony afford to lose before the blow back from their investors causes damage. A ugly price war could drive the losses over ten billion dollars. Then any announcement of a new console could be the rallying call for a sell off. Loss of faith then leads to a decline in the companies credit rating.

So for those saying Microsoft cannot possibly forfeit profit. I say to them were you Microsoft with the opportunity to permanently remove a rival would a little pocket change stand in your way, and have little doubt with the profit margins Microsoft enjoys it is pocket change. Especially with their attach rates and subscription service all they need is a little time to recover the losses.

The question isn't whether Microsoft is greedy enough. The question is whether Microsoft is vicious enough. To be honest the way some members describe Microsoft I think you know the answer. Hell Sony is making it easy, because every time that Sony swallows a massive loss it just gives Microsoft cover. How can Sony claim unfair competition when they are the ones loss leading billions of dollars in cash. The answer is they cannot. Microsoft is just being financially competent. Hell thanks to a subscription service they can even proclaim that the proceeds are allowing them to cover the costs of loss leading.

Hehe good post and excellent observation !