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Forums - Microsoft - How come people say the Xbox 360 can't have any more price cuts?

Darth Tigris on 23 May 2009






nightsurge said:
It makes me laugh when people think that the PS3 has "more room to drop the price" than the 360. In reality, though, the PS3 will never be able to reach as low of a price as the 360 because of it's extra tech and more expensive technology. While the 360 may one day reach $99 at the very end of it's life, the PS3 will only be able to be lowered to about $200 at the end of its life due to all this extra technology and more expensive technology they added into it.

The PS3's price originally will drop more, and faster, given it's initial high price tag, but after it hits $300 it will stall for easily two years before another price cut could be afforded and affective. This is because the rate at which things become cheaper can roughly follow Moore's Law and so after 2 years of production the parts should cost roughly half as much. This is true for the PS3 as at launch it cost nearly $800-900 to make and now is roughly $400-450 to make. The 360 started at roughly $475 to make and now costs about $200-225 to make. That means that the 360 will be able to afford another price cut within the coming months if needed, while the PS3's cost of production will not reach $300 for another year, and will not reach $200 production cost for at least another 2-3 years.

And that's if things follow Moore's law exactly which will not be the case.

In reality, the 360 has more room to lower the price or to change the bundles because it still holds the majority of it's sales at the $300 Pro console. This is likely to be lowered to $200-250, and then again to $200 within a year, while the Arcade will lower to $150. Ok, I know I am speaking in absolutes, so I'd just like to clarify that this is what I feel has a very great probability to happen and not necessarily the actual outcome.

Regardless, the main fact I want to come across is that since the PS3 started at such a high price, it will end at a much higher price than the 360. You will never see a mass market priced PS3 at $200 until the day this generation ends and the 360 will almost assuredly maintain a 50% cheaper model until the end of the generation.

Well that just about took the wind out of anything I wanted to say, so I'll just quote it and add this little tidbit:


 


/thread



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thx1139 on 23 May 2009






Million said:








 



 


The 360 is already below the price of it's competetion in the form of the Arcade , further dropping the price of the XBOX 360 arcade or Pro reduces the perceived value of the console , maybe even to a greater extent than the price of the console . As we all know perceived value is important , it's what affects the strenght/viability of a brand.


 




This such a load of bull$hit.  There was never a problem for the PS3 to be reduced from $300 to $200 1.5 years from release.  There was never a problem for another $20 reduction the following year or another $30 the following year.


It makes to much sense for MS to reduce the arcade to $129 or $149 to counter PS3 drop to $299.  The arcade wont loose money when this happens and infact the added eventual HDD sale will add extra profit later on.  Even if MS drops the price of the smallest size HDD to $80 the profit for MS is still substantial.



Its libraries that sell systems not a single game.

lapsed_gamer on 23 May 2009

I will state again what I believe the Arcade is for: it is to compete with the PS2. And it was successful until the most recent price drop. (As many have said, the $99 PS2 is a good thing to look to before counting out price drops.)

If MS can limit the sales of the console Sony makes the most money on, it will limit what Sony can do to really push the PS3's price down. I also believe Sony is worried about this. If they cut their price by $100 and the promised Microsoft answer creates a $150 Arcade, not only are they losing money on the PS3, but they have effectively killed off the PS2.



"You can never jump away from Conclusions. Getting back is not so easy. That's why we're so terribly crowded here."

Canby - The Phantom Tollbooth

Cueil on 23 May 2009
lapsed_gamer said:
I will state again what I believe the Arcade is for: it is to compete with the PS2. And it was successful until the most recent price drop. (As many have said, the $99 PS2 is a good thing to look to before counting out price drops.)

If MS can limit the sales of the console Sony makes the most money on, it will limit what Sony can do to really push the PS3's price down. I also believe Sony is worried about this. If they cut their price by $100 and the promised Microsoft answer creates a $150 Arcade, not only are they losing money on the PS3, but they have effectively killed off the PS2.


I think that the most probable outcome is Sony drops the WiFi support and maybe drops the HDMI to 1.2.  They may even go with a cheaper shell with a cheaper finish.



 
Get your Portable ID!

CommunistHater on 23 May 2009

Arcade should be 169 to match psp and dsi

Pro 249 to match Wii

Elite should match PS3



Repent or be destroyed

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Million on 23 May 2009
thx1139 said:






Million said:








 

 


The 360 is already below the price of it's competetion in the form of the Arcade , further dropping the price of the XBOX 360 arcade or Pro reduces the perceived value of the console , maybe even to a greater extent than the price of the console . As we all know perceived value is important , it's what affects the strenght/viability of a brand.


 


This such a load of bull$hit.  There was never a problem for the PS3 to be reduced from $300 to $200 1.5 years from release.  There was never a problem for another $20 reduction the following year or another $30 the following year.


It makes to much sense for MS to reduce the arcade to $129 or $149 to counter PS3 drop to $299.  The arcade wont loose money when this happens and infact the added eventual HDD sale will add extra profit later on.  Even if MS drops the price of the smallest size HDD to $80 the profit for MS is still substantial.

Do you even read your typing , the numbers clearly demonstrate my point ! . I can't verify the prices because i'm a UK resident and don't know about the cost of consoles in america. But the difference between the PS3 price drop and the XBOX 360 price drop is that one was done to deal with an affordability issue , people wanted the PS3 but couldn't afford it. another was done to stimulate demand that wasn't there , the XBOX 360 is now in the price range of the PSP & PS2 .




shinyuhadouken on 23 May 2009
RolStoppable said:
Sony still has a lot of aces up their sleeve. They have a lot of room for price cuts, they have the best exclusive games and the PS3 is futureproof which will guarantee it to outlive the 360 by many years.

The PS3 is a MUST HAVE console this generation.

did you look that up on the internet?



Not a 360 fanboy, just a PS3 fanboy hater that likes putting them in their place ^.^

rafichamp on 23 May 2009

The 360 could and will have a price cut once the PS3 does, but a PS3 price cut would do a lot more damage then a 360 price cut, and so Microsoft has to look at that too.



Dodece on 24 May 2009

One word for the group to consider motivation. You cannot argue that profitability is the only goal for both companies. Were that the case there would no longer be a Sony console, and Microsoft would not have spent billions on their previous console. The reality is that both consoles are the fulcrum of a struggle. Which allows for both players to easily spend more then they make in the hope that through dominance they will reap a long term windfall.

Microsoft wants more then to win the console war this generation. Given the current economic situation. Their strong financial status, and with the weakness of Sony they have an opportunity to push the competition from the market. A pricing war with Sony could drive the losses so high that Sony could be forced to leave the market. Giving Microsoft what it wants.

I know a lot of members that say that will not happen, but we need to be realistic. How much can Sony afford to lose before the blow back from their investors causes damage. A ugly price war could drive the losses over ten billion dollars. Then any announcement of a new console could be the rallying call for a sell off. Loss of faith then leads to a decline in the companies credit rating.

So for those saying Microsoft cannot possibly forfeit profit. I say to them were you Microsoft with the opportunity to permanently remove a rival would a little pocket change stand in your way, and have little doubt with the profit margins Microsoft enjoys it is pocket change. Especially with their attach rates and subscription service all they need is a little time to recover the losses.

The question isn't whether Microsoft is greedy enough. The question is whether Microsoft is vicious enough. To be honest the way some members describe Microsoft I think you know the answer. Hell Sony is making it easy, because every time that Sony swallows a massive loss it just gives Microsoft cover. How can Sony claim unfair competition when they are the ones loss leading billions of dollars in cash. The answer is they cannot. Microsoft is just being financially competent. Hell thanks to a subscription service they can even proclaim that the proceeds are allowing them to cover the costs of loss leading.



http://live.xbox.com/member/Dodece

yo_john117 on 24 May 2009
nightsurge said:
It makes me laugh when people think that the PS3 has "more room to drop the price" than the 360. In reality, though, the PS3 will never be able to reach as low of a price as the 360 because of it's extra tech and more expensive technology. While the 360 may one day reach $99 at the very end of it's life, the PS3 will only be able to be lowered to about $200 at the end of its life due to all this extra technology and more expensive technology they added into it.

The PS3's price originally will drop more, and faster, given it's initial high price tag, but after it hits $300 it will stall for easily two years before another price cut could be afforded and affective. This is because the rate at which things become cheaper can roughly follow Moore's Law and so after 2 years of production the parts should cost roughly half as much. This is true for the PS3 as at launch it cost nearly $800-900 to make and now is roughly $400-450 to make. The 360 started at roughly $475 to make and now costs about $200-225 to make. That means that the 360 will be able to afford another price cut within the coming months if needed, while the PS3's cost of production will not reach $300 for another year, and will not reach $200 production cost for at least another 2-3 years.

And that's if things follow Moore's law exactly which will not be the case.

In reality, the 360 has more room to lower the price or to change the bundles because it still holds the majority of it's sales at the $300 Pro console. This is likely to be lowered to $200-250, and then again to $200 within a year, while the Arcade will lower to $150. Ok, I know I am speaking in absolutes, so I'd just like to clarify that this is what I feel has a very great probability to happen and not necessarily the actual outcome.

Regardless, the main fact I want to come across is that since the PS3 started at such a high price, it will end at a much higher price than the 360. You will never see a mass market priced PS3 at $200 until the day this generation ends and the 360 will almost assuredly maintain a 50% cheaper model until the end of the generation.