So Microsoft offered a $50 price drop for the US, now unless Sony counters soon this will all but guarantee MS a victory for November and possibly December. But my question is about momentum. This isn't the first time Microsoft has done a temporary price drop, they did one for March when they dropped the price to $450. At the time this was a smart move that led to MS having very strong March sales, but in the months following XBO numbers dropped off a cliff and stayed very low until only recently. I believe that has a lot to do with people being conditioned to wait for another price drop. If you do too many temporary price drops people are less likely to buy the console in normal months when they could just wait for another deal. This $50 price drop will help Microsoft during the holidays but what about January on when they revert to $400? Let's say they don't have another price drop until E3, that'll lead to about 5 months of lower sales because people would rather wait. 

Note: I am not downplaying XBO success here. It is doing very well right now with all the bundles. Just seeing what people think about this. 

I totally see this price drop not being temporary. I think they are going to keep this price even after the holidays and only said that to boost christmas sales.

Saying something is limited in time as always a good impact on sales, people don't want to miss it. The downside is that when the price come back to normal, the sales drop dramatically.

Microsoft need a bigger installed base and that is a way to achieve it, I hope for them...

Personally, I don't think there is such a thing as a temporary price drop when it comes to consoles.

And any kinda price drop is smart if it can give a significant boost in sales.

And sony doesn't have to do anything. MS winning november and december in NA only means that sony loses those months combined by at most 200k units.Also means that their lead in NA is cut down by 200k. Thats nothing compared to how well they will sell everywhere else.

Did an official temporary price drop of any product ever work?

It's hard to say.

I think if a system has a lot of exciting games that can generate a lot of hype, some consumers may buy the system out of impulse even if they expect another price drop. But then there's the legitimate question of how many of those buyers typically buy consoles out of impulse and how many potential consumers who are just waiting for more game AND price drops will be persuaded to buy the system then versus later. I guess this is what Microsoft is testing by creating all these price drops, because they can make potential consumers who didn't want to buy the system this year wait for another price drop next November. As for how many consumers behave this way, that remains to be seen.

But maybe consumers will forget about the price drop trend and buy the system when more games come out. Some smartphone consumers buy the next version as soon as it comes out. Perhaps xbox fans/consumers (or gamers in general) behave like that too.

If "work" means stimulate sales, yes.

I'd like to see them raise the price come Jan, they'll get butchered. Only way they can compete with PS4 in US is to have a price advantage.

I think shock drastic weekend price cuts may be a good idea because the consumer doesn't get used to that price, but for 2 whole months? No way.

Edit - anyway I think MS are saying temporary right now because it adds urgency. Come Jan they might just keep it the same.

You mean the drop the price?

Yeah keeping it permanent is the smartest option. 

Just being cheaper than PS4 yeah.

MS need to go more than keeping it permanant, they need to go $299 at E3.

temporary price cuts are actually really smart. Well, maybe smart isn't the right word. It's just good business.