Squilliam said:
Um, in reality they are losing the high end SKU and not the mid range SKU. Its a convenience issue, and nothing more. Its simply easier for them to drop the Premium and reconfigure than it is to drop the Elite as they are always going to be trending towards larger HDDs anyway. There are rumours of even larger HDDs being offered for people who need more than 120GB. What they do depends on their goals. I see no room for concern here, they will do whatever action they deem to suit their interests best. They don't have any reason to worry about Sony running away with anything because their 8M console lead gives them room to sit for a year and focus on profitability if they so wish. Sony has far more reason to worry about what Microsoft does than vice versa as the latter really does have the resources to cut the price significantly and the profitability to match, especially considering Microsofts strong Live revenue.
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Kinda funny how your tune has changed over the last month. Now you agree with my line of thinking, that the 360 is doing pretty darn good at the moment, and MS will be content to ride things out until next year.
Remember this thread?
My post:
I still don't think the 360 will get a much of a price cut this year. The base price for the console won't dip below $179, if it ever gets lower than $199 (this year, I mean).
As you said, sales are up 17% year on year, and last year they were up over the previous year. Sales are great for the 360, despite a recession and other factors working against it. I can't see another price drop doing all that much to increase sales unless it's a drastic price cut. If an $80 cut (30%) could only increase sales 17%, another price cut only a year later won't do much more.
It's like the GameCube dropping to $99. I mean yeah, it'll boost sales to a degree, but the console's fate for the most part is already sealed. Might as well wait until sales start to dip to drop the price again. I mean, look how long Sony waited to drop the ps2 from $129 to $99.
I think Engadget's "mole" is closest to the mark. Replacing the Pro with the Elite SKU is a way for them to do a price drop of sorts and increase sales without really losing any revenue. I think they'll do that this holiday season, then ride things out until the end of 2010 when they'll re-launch the 360 with Natal, doing some DSi-like upgrades to the system overall. That'll be their big chance to capture a larger part of the market.
I don't think their focus at the moment is to increase sales of the 360 as is. I think their focus is to simply keep the momentum they have going until Natal is ready and they can try and shake up the market.
Your response:
That 30% cut only applies to the people who want the Arcade SKU, it doesn't make up the bulk of the sales. The main Xbox 360 price cut came from the $50 or 15% cut on the Premium SKU, and overall sales are up by 'only' 17% but they would have been down by at least 10% YOY if not 20-30% without it so overall the price cut had a significant effect.
A comparison with the Gamecube/PS2 are moot, with the former the PS2 was the all out most wanted console and with the latter Sony uses it as a profit driver. They certainly did not have several years of increasing software sales to look forward to as an incentive to cut the price, the profit was on the console itself.
IMO the mole has it wrong or the whole story hasn't come out yet. They have already replaced the Arcade SKU with the 512mb model quietly and now they are probably looking to clear both the Premium and Elite so they can bring in SKUs with larger HDDs to coincide with direct downloads of games. They need 120GB minimum in the Xbox 360 and better would probably be something like 160 or 180GB if they wanted your average Premium owner to download games onto the system. There have already been rumours that they have been checking out larget HDD sizes like 320 and 500GB.
They have a focus on Natal, but they also need to keep momentum up so they can drive into the next holiday season with good momentum. To really launch Natal successfully they will need a lot of consoles on the ground to spur adoption from developers so they have the incentive to create software to give consumers the incentive to buy the interface. It makes their job a lot easier with 55M consoles sold than say 45M
You were pretty adamant that MS would continue to drop prices this year. I always figured MS were pretty comfy were they were, and saw no reason to cut prices in the near future, outside of the Elite.
Honestly, MS cutting the price this holiday season would've only made sense if they wanted to hinder Sony and the ps3 as much as possible while not carrying what harm may come to themselves. In the end, MS is in this for the money, and they have little reason to cut the price of the 360 this holiday without some deeper, darker motive. They hold the high ground in this battle. It would only cost them more to get higher.
