http://www.joystiq.com/2008/09/04/how-important-is-the-199-xbox-360/

How important is the $199 Xbox 360?

98 Commentsby Kyle Orland Sep 4th 2008 1:00PM 
Filed under: Retro, Microsoft Xbox, Microsoft Xbox 360, Business

Microsoft has long acknowledged that it considers $200 the "sweet spot" of console price points. Now that the manufacturer has finally hit that sweet spot with the new $199 Xbox 360 Arcade, we've been wondering exactly what kind of impact Microsoft can expect, historically, in its bottom line. Luckily, Matt Matthews over at Edge Online did all the heavy lifting for us over a year ago, looking at the effect of system pricing on sales numbers in the last generation of the console wars.

The results, as you can see above, are pretty clear. Only 13% of original Xbox systems sold at the $300 price point, and a plurality of sales came at an eventual floor of $150. Sony's PS2 similarly only sold a quarter of its eventual installed base at a price greater than $200 (Nintendo's Gamecube never sold for greater than $200).

Of course, history is an imprecise guide here. The original Xbox dropped under $200 within six months of its initial release, while the Xbox 360 went nearly three years (exactly 1018 days) before hitting the sweet spot. And while the original Xbox also had competition from Sony and Nintendo, it didn't have to compete with "premium" configurations offered by Microsoft itself. Still, we can't imagine being the first current-gen system to be available for under two Benjamins will hurt sales of the system. For now, the unanswerable question remains: Exactly how much will it not hurt?

I saw this on Joystiq eariler... Figured you post it :P

I don't know how much it'll do... It's only there so that in commercials they can say "Starting at 199". The Pro failed to light up the charts at 299 just six weeks ago, so that won't be much different, and the Elite, meh, it really all depends on the Arcade, whether or not people see the low price and take it given the lack of features possible with a hard drive (Movies, TV shows, XBOX originals, XBLA, etc.)

the price will only have a temp effect imo

The problem is, when the Xbox hit $150, is also when modding of the Xbox became very easy.

A lot. I wouldn't be surprised if it beat the PS3 in sales and maybe the Wii for this week.

Again, Elite is going to be Microsoft's "money maker" to sucker those into paying $400 for a shiney black console and slightly larger Hard Drive. MS has to easily be making $50 or more now off those consoles even with the price drop. BTW, im one of those suckers but I paid just over $300 with Live.com cash back.

The Pro will slightly increase in sales, imho, at $300 and MS will make very little profit off that till the new chips are in full production.

The Arcade sales will increase dramatically to the point where some will sell out, and of course MS will either be breaking even on these consoles or losing a small chunk of cash. That depends on how much MS is paying to have those memory cards made, and how much credit is paid for the free XBLA titles, because the basic components aren't beefy (normal composite cable, no hdmi cable, etc.) and last I knew companies only saw a good 20% of the XBLA sales. So who knows? People will also be buying $200 Arcades once the Jaspers are confirmed to replace their current falcon or launch units.

JaggedSac said: http://www.joystiq.com/2008/09/04/how-important-is-the-199-xbox-360/ How important is the $199 Xbox 360? 98 Commentsby Kyle Orland Sep 4th 2008 1:00PM  Filed under: Retro, Microsoft Xbox, Microsoft Xbox 360, Business Microsoft has long acknowledged that it considers $200 the "sweet spot" of console price points. Now that the manufacturer has finally hit that sweet spot with the new $199 Xbox 360 Arcade, we've been wondering exactly what kind of impact Microsoft can expect, historically, in its bottom line. Luckily, Matt Matthews over at Edge Online did all the heavy lifting for us over a year ago, looking at the effect of system pricing on sales numbers in the last generation of the console wars. The results, as you can see above, are pretty clear. Only 13% of original Xbox systems sold at the $300 price point, and a plurality of sales came at an eventual floor of $150. Sony's PS2 similarly only sold a quarter of its eventual installed base at a price greater than $200 (Nintendo's Gamecube never sold for greater than $200). Of course, history is an imprecise guide here. The original Xbox dropped under $200 within six months of its initial release, while the Xbox 360 went nearly three years (exactly 1018 days) before hitting the sweet spot. And while the original Xbox also had competition from Sony and Nintendo, it didn't have to compete with "premium" configurations offered by Microsoft itself. Still, we can't imagine being the first current-gen system to be available for under two Benjamins will hurt sales of the system. For now, the unanswerable question remains: Exactly how much will it not hurt?

I think the bolded has a lot to due with those %'s.

It was available on the market for ~55 months. Only 6 of those were >$200 according to this article.

So for 89% of its life it was sub $200 which only account for 87% of its sales(If I take $200 above to be literally $199 and thus <$200). Meh, I think there is no proof that <$200 was the key.

If you remove the actual $200 sales percent above you have only 64% of its sales which definitely disproves this theory.

It will have a good Increase and Should Outsell PS3 WW at least Temporaily

Yes but the situation is a lot different when you have numerous versions out. PS2 and Xbox sold better as the price dropped out because they were the one and only dominant version. Now you are putting the perception wise "weaker" SKU's at the good price while the better deals are still at a higher price.

The pricedrop is simply for marketing and advertising as the Arcade has always been for but doubtful to sell more of them considering I think consumers have wised up to buying the "less advanced" SKU's as I put it.

I seriously doubt that too many people (aka families looking for a cheap syetem) bought a signifigant amount of x-boxes for moding.