Shit, I could have told you that the 360 would see a price drop soon. MS had to do something to counter the PS3 price drop and to divert attention from the hardware issues, so it wasn't hard to see this coming.

On the other hand, two price drops within a span of three months would be downright retarded. The media would have a ball spinning it, and they'd have two SKU's on the market(one of which is probably still losing money) for nothing.

Lastly, the price isn't even the reason its sales have been sluggish all year. It also has to do with its one-dimensional software library. If MS were going to do a $100 cut, they've have done it all at once across all SKU's, especially if they wanted to clear out inventory.

Having three SKU's on the market at once and then decreasing the price difference between the Premium and the Core and increasing the price between the Premium and the Elite is just dumb-da-dumb-dumb-dumb, and is almost on par with the Genesis/Sega CD/32X bungling.

 first of PS3 is not doing a price drop but a clearance price.... MS is doing a real one not to clear a model but to clear a generation of chips.... so I don't think a reaction to the PS3 price drop is the main reason

no it's not dumb... why should they cut it more and make less money if their market analist told them the stock will be cleared in time for the falcon.. and then do a another cut on the falcon because it cost them less money to produce.... it makes perfect sense to me  IMHO especialy business wise to make more profit, which is the purpose of a corporation in the first place 

Call it what you want, but waiting almost two years to drop the price by a pitiful $50 bucks is ridiculous. It's not a reaction to the PS3 price drop? C'mon. You can't wait for two years AND a price cut by the competition and then just do nothing. That would look even worse.

No it's not ridiculous, you have countless exemples in other markets than videogame.... why every companie should follow the same strategy ??? i'm not arguing if you are right or wrong, i'm just saying it's not a must do, and may or may not end up better on the long run. a company has to find the right balance between making profit a gaining market shares and it can vary between companies on the same market for a lot of reasons... a wild exemple you can have smaller market share with a better margin than the concurence and then pull out more profit, without saying that if you do less games but with better ratio market shares and number of copies sold... which makes it more cost efficient for the dev, than a console with more market shares but with worst ratio of copy sold... the real target for a company is to make more profit than the other... it often implies to dominate the market but not always<--- general statement not specific to VG

Three SKU's is dumb. It confuses customers, it limits developers because they now have to take into account that one of them doesn't have a hard drive, it limits the content that can appear on XLA because again, one of them doesn't have a hard drive, and it also affects how they can be priced. The way it is now, the Core is more handicapped than the closest parking space at the grocery store, because Core + 512MB memory card makes it only $20 less expensive than the premium, and you still don't have HD output, you're still without 19.5GB of storage, and you don't get wireless controllers. The price between the Premium and Elite just INCREASED despite the fact that the latter doesn't provide anything more for gaming. Another price drop on the Premium would make the Core completely worthless and would increase the raise the price difference between the Premium and the Elite to a whopping $150. If they wanted to insure a profit, then there should have just been one SKU instead of pumping R&D, manufacturing, marketing, and advertising into two SKU's and then promptly proceeding to make them look like complete and total ripoffs.

agreed 100% 

A $100 price drop between last Christmas and this Spring and a more diverse game library would have been a hell of a lot better than this. It would have all but dealt the final blow to the PS3 just months after launch and would have enabled the 360 to atleast compete on some level with the Wii. Instead, the Wii will have atleast another 8 months to a year all to itself as the cheapest console even if it doesn't do a price cut, and Sony is now able to do another $100 price cut sooner(possibly in time for MGS4) and decrease the difference even further.

it was not possible to make interesting profit on the long run... now they are so they can cut it even more when the falcon will come... your idea is right, it was just not possible for MS to do it... that's why Sony price is not one it's a clearance one... and I'm not sure they can afford another one before christmas... and if they do it's going to be a risky bet from Sony... what MS didn't need to do last year in regarde of their results..... and would have been stupid to do the first price cut in end of 1st quarter  begining of 2nd 2007..... still profit wise... if you do one it's for christmas... with the announcement effect and sh**t.... WII is just hard to touch because they have a way lower production cost than the 2 others.... and the life expectency of the WII is still a big ??????? compare to the 2 other consoles IMO..... which will imply investment in research and dev from nintendo for a upgraded version or a new system if needed.... making the WII less profitable that it is right now....those companies are looking to make more profit on the very long run (5-6 years) than the others.... and for now nobody can really say which strategy choice will be the best 

You keep going back to profits, but manufacturing costs are only one part of it. Microsoft has spend far more money on advertising and marketing than the other two, and they really haven't gotten a return on it. There were a slew of 360 ads in Europe from last summer up to Christmas, and yet the 360 still isn't selling any better there. MS has also spent more money buying devs and paying them for exclusive games and content, and for this, they still haven't seen a return. Then you have the faulty hardware that's going to cost them one billion dollars by their own estimates. There's also the fact that MS doesn't have many multi-million selling first or second party titles other than Halo.

At this point, in order for MS to make a profit, they'd need marketshare on par with the PS2.

When you read my post, it should be obvious that I'm telling you to compare it with cheaper consoles, no? Or are you saying the Wii is the cheapest console ever? BTW, the PS is not a Nintendo console as far as I know...

nintendo was thinking of releasin the wii for $299.99 if they new it would sell this good.