You did see their last "quarterly report", right? The whole company, including the Home Entertainment division, made a whole lot of money.

On topic: MS will probably announce something at GDC. They wouldn't be doing this on purpose unless they had a reason, or they just totally f'ed up what demand would be... 

Well, I only see what I read from Europe (if you see what I mean) and I see the following:

a) the retail chains seem to have too many Arcades - this is not good. It confuses ordering and takes up valuable retail space. I get the strong feeling MS overlayed Arcade as a play against Wii and should have released far less to retail. It also raises question of whether production of other models had to be reduced to increase Arcade production

b) 360 has been out a while so some change seems due - however MS is not a manufacturer like Sony so a redesign is tougher for them (hell, to be blunt producing good electronic devices point blank is tougher for them). Unless they've managed to keep a big secret (and are willing to blow being profitable for a change by spending a lot on it) I therefore doubt its a new model (a 360 slim if you will). BR addon, new bundle, something like that? Sure. Coupled with price drop would seem much more likely.

c) there do seem to be shortages of Elites / Premium so either they did have trouble increasing production or they got balance of building Arcades vs other models wrong or a combination of the two. I also suspect its harder for them to increase production. Again, this is not their core competancy and the last thing they need is to rush getting some more factories going and produce faulty consoles as a result (it takes time to increase facilities is you want to aim for high quality production) - that on top of RROD legacy would not be worth it IMO


What I have been wondering is how much more do they want to fight this gen? They must see (particularly with Arcade performance) they have no hope of competing for casual/family gamers against Wii in the short to medium term, maybe even the long term.

They've shown already they're willing to risk the appetite of US hardcore gamers for more power and shiny new FPS vs releasing consoles early. So, do they fight aggresively with price cuts, more models, etc. and risk dropping out of profitability now? Or do they chose to stabalize 360, focus on download content, fix RROD and focus on staying ahead of PS3 in US (which I think they could manage) and use groundwork of 360 for their next console while continuing to show a profit?

I think unless they take big risks and spend a lot of money MS has little change of achieving more than 2nd place in US and close 3rd place outside US - but you know what? So long as their install base is larger than Xbox (which it almost certainly will be) and so long as they've improved their standing in all markets (which they will have) - that's not too bad for console number 2, particulary when it was rushed to market.

 A slim would involve less component costs and would make them more money.........

I think the Arcade is still priced to high for what it is. At the end of the day it doesn't have the gimmick value the Wii has (not an insult to the Wii at all, the gimmick is an EXTRA feature rather than the main one) and it STILL costs a little more. This needs to be rectified.

Granted if MS dropped the price below the Wii's Nintendo would drop the price the instant the Wii stopped selling out, but at least it would keep Nintendo on their toes, and increase sales for both systems.

I agree. MS are smart, and they aren't beginners anymore in the console business. Since it apparently works for Sony to release a new SKU every now and then, it's possible there might be a SKU with bigger HD on it's way.

Hard to speculate what exactly is coming, but I bet something new is on it's way really soon. Wasn't the game bundle for christmas successful? So a game bundle is logical too.

They went out of money due to massive repair-costs and as a result they couldn't pay the manufacturers bills :D

I find this scenario quite unlikely. If there was an actual SKU update coming up really soon (this quarter) it would have been announced already, or at least leaked by 'a trusted source' since they would want to get all the possible hype before that. Even the Halo-version was drummed some time in advance. Especially if they actually managed to permanently rid off the RROD they would be more than happy to tell the world.

As for the software bundle, it might be, but what hardware would they bundle with? Arcade? Or are you suggesting that they have hidden resources of premium and elite in storage just to be released with a SW bundle?

You have a point, if there was a new SKU coming there should definately be a leak already.

The software bundle theory assumes that the shortages were intentional, to dry up the retail channel and make room for something new, not that it happend because of a miscalculation about demand (which I think is unlikely by a player such as MS). So I see a software bundle possible, although that would interfere with a soon approaching price drop.

Hmm... I don't know what to believe, just that there has to be something in the works behind the scenes.

Think about it Salamursu. Why do console manufacturers deny to the death that a new sku, new bundle or price cut are coming until just a few days before it arrives? Simple, people would stop buying currently existing stock if they new they could get a better deal very soon. Microsoft would want as many premiums and elites gone as possible before they put more in with better bundles (and such games could actually come inside the box ala forza and viva pinata).

Additionally, GDC starts on the 18th, the perfect time to announce something big like new bundles, a new SKU or a price cut. I might add that Microsoft has the biggest booth at the whole conference, though that doesn't always mean anything.

Salamursu,

What's your take on this? You haven't put forth your theory in the thread yet.