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misterd on 18 January 2008
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Lord N said:

I would be surprised if MS drops the price at all before Christmas. They waited two years to drop it by a lousy $50, so I don't see why they'd do it again so soon.

A $100 price cut would have been effective right before the PS3 and Wii launched, and they should have done another to $250 right before last holiday season. 

 Sony's high launch price and limited availability made one unnecessary in 2006 (remember no one saw the Wii as a serious competitor back then). Perception is that the $1bil warranty extension on the 360 prohibited a typical price cut in 2007. However, it is clear that Sony's price cut and new models have helped them far, far more than MS's similar actions. And now the consoles will be put in even more direct competition than in the past, as the first huge MP titles are released (GTA4 specifically, but also DMC4, Silent Hill 5, Soul Caliber 4, and others I am forgetting). With HALO3 launched, the only arrow left in MS quiver is a price cut. If they don't use it now, they could very well loose even more ground to the PS3. Remember, most of those who haven't jumped to the current gen were Sony owners last. History implies that they won't change brands unless the new console gives them a reason, which puts the pressure on MS more than Sony.  


As it stands right now, the 360 already has a 7 million lead over the PS3. A price cut probably wouldn't increase it by more than 1million, and MS would still have the Wii to worry about. That being said, such a cut wouldn't hurt Sony all that much, wouldn't improve their standing in the market as they'd still be a distant second behind the Wii, and would insure that MS is stil sitting on billions of dollars of red ink at the end of the generation as the hardware would be sold at a loss. Not to mention, it would look like desperation/uncertainty.

MS can't do much about Wii so long as that price difference remains so large.

As for Sony, that 7million lead is slowly being eaten away. Since MS is frozen out of the Eastern market, it is under tremendous pressure to succeed in the US and Europe. While the US is looking OK, Europe is quickly breaking Sony's way, and Sony is looking to have a huge software year. If MS wants a decisive victory over the PS3, now is the time to act.