WW Up

[Squilliam]

Hyruken said:

Well it depends doesn't it. The 360 won't get a price cut while it is still like 30% up year over year. It also won't get a price cut if MS can't sort out the supply issues. By accounts the problem isn't selling them, it is getting the consoles to the shops to be sold. Once that has been sorted and we get through the first 2 quarters i think we will be in a better position to guess if the 360 needs a price cut or not. It has been 3 years since the last one pretty much so i don't think they will do it simply because its been a longtime. In Japan i imagine it will get a small cut but i honestly don't think MS care as much for Japan as they once did. I am sure they realise without making massive franchises exclusive the 360 won't be pushing PS3/Wii numbers.

I don't think supply will be a serious issue going forward. Last year they had to ramp up from zero to supply to unprecedented Xbox 360 demand and for the most part they did quite well in doing so. Since the sales rate from here on out will dip lower than the production rate required to have met demand last year they should be in a good position to satisfy all outstanding orders within a couple of months.

As for price cuts, it isn't specifically about what they need to do but what they want to do. Their number one goal is to improve profit YOY for this year and the following year after that and so on, it is the funny thing which all publicly traded companies are forced to do by law. If a price cut would definately help them there then a price cut is on the cards, no question about it. Given the fact that they have high gross margins on their consoles compared to the PS3, they may be more profitable even in the short term with a price cut because selling more consoles spreads their operational cost base wider and enables them to sell even more profitable add-ons like Xbox Live subscriptions. Just because they are up YOY doesn't mean that they wouldn't want to be up YOY for second time in a row.