Seece said:
Squilliam said:
I think you're missing the fact that with 2008 and 2010 they added value to the console. Remember the switch from the Core to Arcade with built in memory and a wireless controller? Also in 2010 they added features to the Arcade by increasing the internal storage, adding Wifi and making the box more reliable/quieter/better looking.Effectively if you count the fact that the memory cards were an added cost on the PS2 they are already at the point where the entry cost of the console is identical to the PS2 in 2003. Now if you also count inflation, effectively the Xbox 360 Arcade is cheaper than the PS2 in the same time period up until 2008. If they cut the price again to $149 this year then the Xbox 360 Arcade will effectively again be cheaper or the same price as the PS2 in 2006 counting inflation.
I will say that *(IF)* they decide to be aggressive in price this year it will be because they want to increase market share and fight off competition from both Apple TV and other competiting consoles as well as poison the well somewhat for the introduction of the NES 6 in 2012. They can afford to be aggressive because unlike Sony/Nintendo they would have a range of products from $149 which has low margins all the way up to $299 and they can also sell $149 Kinect accessories or $60 Xbox Live cards. This doesn't mean they will be aggressive, and as one Microsoft employee pointed out to me 'why cut the price in order to satisfy the worst customers when we're selling every single Xbox 360 we can make?'
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True, I understand why at every stage they havn't needed to cut price, I think they've finally reached the limit though on how they can add value to the 360 *cough* blu ray!! lol jk
I get inflation, and I guess it's a factor, I still think the thresholds are the same as last gen though, with $199 being the mass market sweet point, and $99 being a phase out stage, despite inflation.
I don't think they'll be aggressive, which is a shame. $129 I can't see, although what with their other models bringing in the $$, I think that would serve them well. Even though the 360 has another 5 years selling power before it's completely dead, the next 2 are going to be it's last 2 to really suck in the consumer, so I think being $129 during those years would really help them, then a cut to $99 on 720 release to take them to the end.
But nothing is going to make them cut deep enough to make any sort of loss or break even across the average price of the 360, they're in profit mode for the next 3 years now so they can be more flexible with the 720, I guess they need to prove to investors (well not really) that the xbox gaming division can not only be profitable, but has the potential to really grow.
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You have to ask yourself whether a price cut is likely to increase their overall profits. An Xbox 360 Arcade may cost them $140 each and they sell them for $199. If they sell 1M @ $200 and 1.5M @ $149 they will make $59M in hardware profits at $199 and $13M in hardware profits at $149. The extra 500,000 consoles would need make another $92 each to justify the cut. So outside of falling sales and rising inventories, they will only cut the price IMO if they believe it will increase their overall profitability or if they are forced to because of competition.
