| supercat said: Sq- You do realize that teh 360 is going to have to make a price cut, right? What do you think that will do to the profits? MS is in line for a big reduction in profits, mabey -40% or -50% if they have to make a big price cut. |
This thread has nothing to do with Microsofts Xbox 360 strategy, but I'll answer you anyway.
1. They would not need to do more than a 25% price cut at worst. That would do just fine for increasing hardware sales if they thought they needed to. So Arcade down to $149 is the lowest it would absolutely need to go and the Elite would not really go much lower than $230 or so to keep at least an $80 price difference between the two SKUs.
2. Even if they do a price cut their present margins on hardware are probably better than Sony's and they have far higher non hardware revenues from software, accessories and Live subscriptions and content. If they are making $150M a quarter profit on average now and they could subsidise their hardware (600M / 12M consoles sold = $50 per console) and thats not taking into consideration any extra accessory, Live or software sales.
Tease.
Essay Pro