Next Round of Price Cuts

[Dodece]

The only relevant question is this. How dedicated is Microsoft to busting Sony out of the market. When I say bust I mean literally force Sony out of the next gen console market. Given the past year, and everything that Sony has been forced to do just to hang in. Well its not rocket science Microsoft and Nintendo have Sony on the ropes a few well placed strikes away from a knock out.

We can debate financing, and honestly I think Microsoft has far more room to lower prices then Sony. Strategically a major price cut is also essential for their long term plans. First it could give them the leverage they need to force Sony out of at least two markets. A two hundred dollar console is just that consumer friendly if they could get their low end unit down that far. They take too long, and Sony could survive this generation. Right now that has to be a goal for Microsoft. Secure prominence for their brand in the market place. A failed console demolishes consumer confidence.

Second they do need to force Nintendo to compete, or to at least not allow them a gushing river of profits. Not if they plan to be an even stronger market force next generation. Replacing Sony with Nintendo is just exchanging one problem for another. They need to increase the pace of their sales so as to generate some parity with Nintendo. They cannot sell thirty million consoles, and let Nintendo sell over a hundred million.

Strategically there is a lot of impetus for Microsoft to produce a major price push early next year. They could use it to increase financial pressure on their competitors. Might allow them to off one of their competitors, and could lead to a far stronger showing this generation. Had the generation run a little different up to this point there would be an argument for conservative economics, but thanks to how poorly Sony has performed there are opportunities there ripe for the picking.

Once again the only question is how badly does Microsoft want the prize. Making more money in the short term is good. Securing more money in the long term is better. Even so Microsoft could probably swing such price cuts given that they are farther along in the manufacturing curve, and have held off on making large financial concessions to the market. Sony probably couldn't follow them with another price slash. They have basically gambled it all this year. They cut prices by a third, have had to include free games and movies, and Finally they have had to liquidate key assets to do so. Never once generating profit.

I think Microsoft will probably produce such a scheme in either March or April, and I highly doubt they will discontinue their low end model. For non core gamers the differences will be superficial. While I think they will try to tie it in with a major release like Grand Theft Auto. I highly doubt that its permanently attached. Given the propensity of Rockstar to delay, and have difficulties bringing games to market. Well I doubt Microsoft wants their pricing dictated by an unreliable release window.