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Forums - Microsoft - Analyst: Microsoft Could Use Price as a Weapon

vaio on 01 July 2008

Analyst: Microsoft Could Use Price as a Weapon

If the Xbox 360 price cut turns out to be true, it could be an effective weapon for MS to use against Sony, since Sony may be very reluctant to react and take on further losses on the PS3 business.

by James Brightman on Tuesday, July 01, 2008

With a $50 price cut on Microsoft's Xbox 360 seeming more and more likely, Janco Partners analyst Mike Hickey believes that now is an opportune time for Microsoft to take advantage and put pressure on Sony's PS3 business. With 360 hardware sales slowing – the 360 sold just 186.6K units in May – he also believes a price cut is a necessary catalyst.

"...we believe Microsoft will lower the price of the Xbox 360, after market demand for the console has seemingly stalled. There seems to be a limited amount of natural near term catalysts on the horizon sufficient to accelerate hardware growth beyond holiday seasonality, whose ultimate consumer spend could be dampened from a hostile gas pump and general economic deterioration," noted Hickey.

"We continue to believe the Xbox 360 has a distinguished value proposition from the PS3, but Microsoft could use price as a competitive weapon, particularly after Sony reiterates focus on profitability. We do not see any waterfall competitive pricing pressure on the Wii console from Nintendo, where we expect additional supply over the holiday period will meet demand, a market equation that has been out of balance since the console's release."

http://www.gamedaily.com/articles/news/analyst-microsoft-could-use-price-as-a-weapon/?biz=1



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kingofwale on 01 July 2008

lower price point will steal more business from Wii as oppose to PS3.

Look at Europe, Xbox can be had for half the price of PS3, and still being outsold.



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tehsage on 01 July 2008
kingofwale said:
lower price point will steal more business from Wii as oppose to PS3.

Look at Europe, Xbox can be had for half the price of PS3, and still being outsold.

 

 Wouldn't it steal more business from the PS3 because people could buy games that are on both consoles for the 360 because it's cheaper. If people want Wii games, they can only get them on the Wii whereas the PS3 and 360 share a lot of games.



pimpcoop on 01 July 2008

No matter what other companies do like a price cut it still will not make sales better. you can still buy a Wii for 250 and still you will pay 100 bucks for another system. Well there not going to be enough people who will still pay that much more to make a dent into the Wii lead. So this will not be a weapon



Rock_on_2008 on 01 July 2008

PS3 will outsell the X360 no matter what MS does. Europe and Japan do not care that the PS3 is twice the price of the X360. PS3 still outsells the X360.



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dougsdad0629 on 01 July 2008
kingofwale said:
lower price point will steal more business from Wii as oppose to PS3.

Look at Europe, Xbox can be had for half the price of PS3, and still being outsold.

 

 I disagree.  IMO, people who are in the market for a Wii are looking for something different than what the 360 or PS3 offers.  I have a PS3 and  Wii.  When I'm buying a game for the Wii, I'm looking for an experience different from that which I can get on my PS3.  My MGS4/Call of Duty/GTA type experiences come on my PS3.  For the Wii, I'm looking at Trauma Center/Zelda/Mario/Boom Blox type of experiences.  To put it another way for example, I won't buy Medal of Honor Heroes 2 on Wii no matter how great the controls are.  To me, that type of experience is better had with superb graphics and surround sound via Medal of Honor or Call of Duty on my PS3.  The one area where I'm making an exception is with Star Wars Force Unleashed.  I'm willing to sacrifice the graphics of the PS3 version in exchange for being able to wield a lightsaber and motion my force powers.



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dbot on 01 July 2008

I don't think a price drop impacts Wii sales. The 360 is already the cheapest console on the market. If you take into account the forced Wii bundles. It will be interesting to see the impact of this drop. It will definately spike sales for the next few weeks, but if it doesn't sustain a higher weekly sales volume then MS is in deep trouble.



Thanks for the input, Jeff.

 

 

dougsdad0629 on 01 July 2008
dbot said:
I don't think a price drop impacts Wii sales. The 360 is already the cheapest console on the market. If you take into account the forced Wii bundles. It will be interesting to see the impact of this drop. It will definately spike sales for the next few weeks, but if it doesn't sustain a higher weekly sales volume then MS is in deep trouble.

 

 I know this has been stated before, but the 360 only APPEARS cheap in relation to the PS3.  Take into account what you'd have to add to match the PS3 and it's actually MORE expensive.  Add wi-fi, a bigger hard drive (on anything except the Elite of course), pay for XBOX Live just to name a few.  Throw in PS3's ability to play back the next-gen hi-def movie standard and the PS3 is a FAR better value for your dollar IMO.



Keep this in mind when reading what I type...

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dbot on 01 July 2008
dougsdad0629 said:
dbot said:
I don't think a price drop impacts Wii sales. The 360 is already the cheapest console on the market. If you take into account the forced Wii bundles. It will be interesting to see the impact of this drop. It will definately spike sales for the next few weeks, but if it doesn't sustain a higher weekly sales volume then MS is in deep trouble.

 

 I know this has been stated before, but the 360 only APPEARS cheap in relation to the PS3.  Take into account what you'd have to add to match the PS3 and it's actually MORE expensive.  Add wi-fi, a bigger hard drive (on anything except the Elite of course), pay for XBOX Live just to name a few.  Throw in PS3's ability to play back the next-gen hi-def movie standard and the PS3 is a FAR better value for your dollar IMO.

I agree that the PS3 is a much better value, but the Arcade is already the cheapest console on the market. 

 



Thanks for the input, Jeff.

 

 

bdbdbd on 01 July 2008

As already said, 360 is the cheapest of the 3 and it still is number 3 in current weekly sales.

@dougsdad: Only if you are going to use the features and it still doesn't change the fact, that you can buy two 360:s with the price of PS3. Or 360 with 3-4 games. So, in reality, the only factor, you mentioned, that has effect in reality, is free online on PS3.



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