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

DrStephenTColbert on 24 May 2009
shinyuhadouken said:
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?

The internet never lies!



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KillerMan on 24 May 2009
CommunistHater said:
Arcade should be 169 to match psp and dsi

Pro 249 to match Wii

Elite should match PS3

Actually arcade cost already179€ and some shops sell it even for same price as DS lite. I am really amazed how microsoft made so powerful console and still make profit for this prices. At the same time PS3 which is about same level as graphics goes cost 399€ and still makes loss (Blu-Ray and Wifi are the only differences and blu-ray drives are not that expensive anymore)



Million on 24 May 2009
yo_john117 said:
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.


Hmm how does that in any way end the thread ?. Microsoft could give away XBOX 360's for free if they wanted to , if the only thing your taking into consideration is Sony's and MS's ability to reduce costs/cut the prices of their consoles then your failing to take into account the more relevant factors of their competition.

Even your price cut argument is weak.


-Moores law doesn't apply to the whole PS3 , there are some non-computing components in the PS3.

-Your price cut argument doesn't take into account methods of distribution both might be using , scales of economy they might be taking advantage.

-You also fail to consider changes in currency.

-You also fail to consider the fact that Sony has sold the PS3 at a loss in past ( I don't think they are now), Sony could in theory take a loss to cut the PS3's price.

-You also fail to consider that Sony has a history in console cost reduction that Microsoft doesn't have.

 

And that's only the begining.

 




mrpapaye on 24 May 2009
Dodece said:
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.

Hehe good post and excellent observation !



Zones : I still don't understand all the love for Blizzard, what was the last game they developed worth playing?
Squilliam on 24 May 2009
Dodece said:
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.

Microsoft actually has profit from the Xbox 360 to forfeit. Furthermore between a larger number of consoles on the market and their Live Gold subcriptions, they could afford quite a heavy price cut. They stated last year that they broke even on the Arcade with accessories and the difference between the Arcade and Premium is only about $40 if you consider thats the cheapest price for the HDD on Newegg and being an OEM they would likely get it cheap enough to offset the extra cost from the external HDD casing. Therefore they could offer that same unit for $200 easily enough by the end of the year as a 20% reduction in cost per year for the base machine is more than feasable.

The interesting part of all this is the creation of a Slim line 360 and what that would mean for price/features. They cannot add wireless now to the current design so in this respect they are hobbled and they wouldn't admit to wanting to add the feature or even that the feature is worthwhile. However what they can do is eventually integrate the ED-Ram, Xenon CPU and Xenos GPU into the one die which would cause a severe reduction in the price of every Xbox 360 component from power supply, to the number of layers on the PCB to the total cost of the chip packages, testing, and lithography. It would also allow them to implement wireless with a redesign of the console chassis.

What would a slim console mean? Well they could probably offer the Xbox 360 Premium for $150-180 if they really wanted to bust Sonys balls here and they would have every justification, owing simply from the very large reduction in cost from finally implementing their Valhalla chipset from information that was leaked years ago. Furthermore any losses they would take on the design would only likely be temporary as a larger single chip is a much better target for a process node shrink than three individual chips.



Tease.

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Sardauk on 24 May 2009
rafichamp said:
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.

Typical silly fanboy statment...

 

IMO, the business model of the 360 is stronger than the PS3 one.

You have to consider the entire revenue process.... no just the margin you make on the console.

So to me :

 

1. A price cut will help the PS3 for sure but MS is ready to align

2. A price cut might severly damage the margin of Sony at first... not the one of MS

3. Even if the PS3 starts to catch up (I believe it will eventually, thanks to the Blu-Ray), I bet they will never be able to make as money as MS on this generation

 

It is like that...



 

Evan Wells (Uncharted 2): I think the differences that you see between any two games has much more to do with the developer than whether it’s on the Xbox or PS3.

Cueil on 24 May 2009
Million said:
yo_john117 said:
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.


Hmm how does that in any way end the thread ?. Microsoft could give away XBOX 360's for free if they wanted to , if the only thing your taking into consideration is Sony's and MS's ability to reduce costs/cut the prices of their consoles then your failing to take into account the more relevant factors of their competition.

Even your price cut argument is weak.


-Moores law doesn't apply to the whole PS3 , there are some non-computing components in the PS3.

-Your price cut argument doesn't take into account methods of distribution both might be using , scales of economy they might be taking advantage.

-You also fail to consider changes in currency.

-You also fail to consider the fact that Sony has sold the PS3 at a loss in past ( I don't think they are now), Sony could in theory take a loss to cut the PS3's price.

-You also fail to consider that Sony has a history in console cost reduction that Microsoft doesn't have.

 

And that's only the begining.

 


This is Microsoft's first real console...



 
Get your Portable ID!

Million on 24 May 2009
Cueil said:
Million said:
yo_john117 said:
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.


Hmm how does that in any way end the thread ?. Microsoft could give away XBOX 360's for free if they wanted to , if the only thing your taking into consideration is Sony's and MS's ability to reduce costs/cut the prices of their consoles then your failing to take into account the more relevant factors of their competition.

Even your price cut argument is weak.


-Moores law doesn't apply to the whole PS3 , there are some non-computing components in the PS3.

-Your price cut argument doesn't take into account methods of distribution both might be using , scales of economy they might be taking advantage.

-You also fail to consider changes in currency.

-You also fail to consider the fact that Sony has sold the PS3 at a loss in past ( I don't think they are now), Sony could in theory take a loss to cut the PS3's price.

-You also fail to consider that Sony has a history in console cost reduction that Microsoft doesn't have.

 

And that's only the begining.

 


This is Microsoft's first real console...

Yes the original XBOX was imaginary.../sarcasm. what you mean is this is microsofts first comercialy viable console.

And how does that add anything to the discussion




nightsurge on 24 May 2009
Million said:
Cueil said:
Million said:
yo_john117 said:
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.


Hmm how does that in any way end the thread ?. Microsoft could give away XBOX 360's for free if they wanted to , if the only thing your taking into consideration is Sony's and MS's ability to reduce costs/cut the prices of their consoles then your failing to take into account the more relevant factors of their competition.

Even your price cut argument is weak.


-Moores law doesn't apply to the whole PS3 , there are some non-computing components in the PS3.

-Your price cut argument doesn't take into account methods of distribution both might be using , scales of economy they might be taking advantage.

-You also fail to consider changes in currency.

-You also fail to consider the fact that Sony has sold the PS3 at a loss in past ( I don't think they are now), Sony could in theory take a loss to cut the PS3's price.

-You also fail to consider that Sony has a history in console cost reduction that Microsoft doesn't have.

 

And that's only the begining.

 


This is Microsoft's first real console...

Yes the original XBOX was imaginary.../sarcasm. what you mean is this is microsofts first comercialy viable console.

And how does that add anything to the discussion

No point in arguing with Million.  This thread is about "How come people say the Xbox 360 can't have any more price cuts?" and I said how it could, and will.

Most of what you said really doesn't matter.  Sony is still selling the PS3 at a loss despite what you may think, and obviously I took this into account since I was listing the "cost of production" for these machines and production cost reductions and NOT the retail cost and their reductions.  Apparently you misunderstood this.  I never said anything about whether they can cut and take losses, they can obviously do that if they so choose, I was merely highlighting the fact tha the PS3 starting out at such a high price will never be able to compete in price with the 360 and will always be about double the price of the cheapest 360 model.  Moore's law applies to pretty much everything.  It's a very vague law that states every 2 years things roughly double in power, and existing components decrease in price by half.  It is not limited to certain components, but all electronics and actually can apply to many other things as well.

Currency is only a big issue with Sony, the ability to cut the price is only a big problem for Sony given their overall financial status.

The rest of your issues don't really affect what I said which is why I feel no need to cover them.  Unless you can prove to me that Sony IS taking advantage of these arguments you made, then I'll look into it, but I already know you can't do that That's why you used the terms "they might" or "consider."



Million on 24 May 2009
nightsurge said:
Million said:
Cueil said:
Million said:
yo_john117 said:
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.


Hmm how does that in any way end the thread ?. Microsoft could give away XBOX 360's for free if they wanted to , if the only thing your taking into consideration is Sony's and MS's ability to reduce costs/cut the prices of their consoles then your failing to take into account the more relevant factors of their competition.

Even your price cut argument is weak.


-Moores law doesn't apply to the whole PS3 , there are some non-computing components in the PS3.

-Your price cut argument doesn't take into account methods of distribution both might be using , scales of economy they might be taking advantage.

-You also fail to consider changes in currency.

-You also fail to consider the fact that Sony has sold the PS3 at a loss in past ( I don't think they are now), Sony could in theory take a loss to cut the PS3's price.

-You also fail to consider that Sony has a history in console cost reduction that Microsoft doesn't have.

 

And that's only the begining.

 


This is Microsoft's first real console...

Yes the original XBOX was imaginary.../sarcasm. what you mean is this is microsofts first comercialy viable console.

And how does that add anything to the discussion

No point in arguing with Million.  This thread is about "How come people say the Xbox 360 can't have any more price cuts?" and I said how it could, and will.

Most of what you said really doesn't matter.  Sony is still selling the PS3 at a loss despite what you may think.  I never said anything about whether they can cut and take losses, they can obviously do that if they so choose, I was merely highlighting the fact tha the PS3 starting out at such a high price will never be able to compete in price with the 360 and will always be about double the price of the cheapest 360 model.  Moore's law applies to pretty much everything.  It's a very vague law that states every 2 years things roughly double in power, and existing components decrease in price by half.  It is not limited to certain components, but all electronics and actually can apply to many other things as well.

Currency is only a big issue with Sony, the ability to cut the price is only a big problem for Sony given their overally financial status.

The rest of your issues don't really affect what I said which is why I feel no need to cover them.  Unless you can prove to me that Sony IS taking advantage of these arguments you made, then I'll look into it, but I already know you can't do that That's why you used the terms "they might" or "consider."

"How come people say the Xbox 360 can't have any more price cuts?" Like I said before MS can price cut more , they could give XBOX 360's away for free if they wanted to but that's irrelevant when all things are taking into consideration , the more relevant question is what will happen if Microsoft cut's their prices and why won't they as a result of that.

I never said Sony was taking advantages of any of the said factors , what I was hinting at was without an analysis taking into account the said factors it would be (and is ) totaly worthless. (With the exception of cost reduction , which Sony has a proven history in)