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When’s The Price Falling? |
by Guest
6/25/2007 |
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When’s the Price Falling?
By Carlo Carrasco
Since November 2005, Microsoft has sold over ten million units of its Xbox 360 accompanied with around sixty million pieces of software and about thirty million peripherals. Now that the 360 is eighteen months old, gamers worldwide continue to wonder when will the first price cut happen. To date, Microsoft continues to deny such intentions and this only fueled speculation.
Even before the launch, I personally felt that Microsoft would follow Sony’s pricing strategy of the PlayStation2. No, this is not about launching ahead of key competitors but rather it’s more about maintaining the launch price for over the first twelve months.
Look at the PS2. It launched in America on October 26, 2000, with a price of $299.99. Even when the old Xbox and GameCube launched a year later, Sony retained the price (despite anticipation and speculation) and it worked wonders for them as hottest PS2 games of the 2001 holiday season sharply spiked console sales. As a result, the big S scored massive profits and sealed its lead in the race. It was only in May 2002 when the PS2 finally got its first price cut.
Many would argue that the reasons behind retaining the launch price had a lot to do with hardware manufacturing costs, developments costs and the like. Let’s face it, Sony lost massively when it launched the PS2.
Look back at those events, you can see a lot of similarities between the PS2 and the Xbox 360. The 360 launched in late 2005, had a hardware bottleneck well into mid-2006, finally received a more stable supply line later and when the holiday came, it sold big time thanks to hot games like Gears of War and Rainbow Six: Vegas. The similarities are undeniable but the catch here is that the 360 comes with a $299 and $399 package. The Xbox 360 Elite by the way, does not count here since it’s so new.
This brings us back to the price cut issue. It’s now June and speculation for a slash only got stronger. We all know that Microsoft lost massively with the old Xbox and was most likely discouraged to slash the 360’s price since the PlayStation 3 comes with a much higher tag price. It’s like Sony gave Microsoft a price cut. However, attention should be paid towards the Nintendo Wii’s current winning streak in North America. Wii’s price is substantially cheaper and attracts a big casual audience, which is the one particular group Microsoft has yet to penetrate deeply. Though nothing has been publicly said, I think the Wii’s hot sales are giving Sony and Microsoft a lot of chills.
Look at Sony’s camp. Recently their CEO Howard Stringer talked about a “price refinement” for the PS3. Considering the fact that their console’s sales are sluggish (they cannot match the sellout rate the PS2 had in its first year), not too many games are available and that their homeland Japan is being dominated by the Wii, a price cut would be a lifesaving factor for them. They don’t have too many choices left as their relationship with 3rd party game developers is nowhere as rosy as it was during the PS2 era. Nintendo is crushing them not only at home but also in the handheld gaming market, which further embarrasses them. To date, Xbox 360 continues to outclass PS3 at retail. I would not be surprised to see the PS3 get its first price cut this October.
Back to Microsoft, they are probably hard at work analyzing what to do next with the 360 (in relation to market conditions) but are also trying to solve growing hardware-related problems. More 360 owners worldwide are experiencing the dreaded 3RL (three flashing red lights), which signifies the hardware failure. Some 3RL victims had to go through the process of calling Microsoft’s technical assistance (which according to some stories had a lot of hassles), shipping their consoles back to them and play the waiting game. 3RL victims who have no access to customer support have to use the temporary solution called the Towel Trick. It is a trick wherein the failed 360 is wrapped with towels/blankets and left on for about fifteen minutes (to generate heat). After the process, the console is supposed to spring back to life and be playable until it is turned off. The Towel Trick is not the best solution but 360 owners who have no access to customer support really have no choice.
The 3RL is potentially dangerous to the Xbox 360 business model as it easily turns off new buyers and frustrates current owners. Think about it. If this problem grows, gamers will be reluctant to buy a 360 even if a price cut happens.
Going back to the price cut issue, some analysts speculate that despite Microsoft’s denial a price cut for the 360 is bound to happen this year. In my view, the best months for a slash are September and October. Let’s face it, Halo 3 will be released and sold massively worldwide come September 25.Both hardcore gamers, fans and newcomers will definitely flock to retail for this game alone.
October is another great month for a price cut. Obviously Grand Theft Auto IV is that month’s big game and it will have a lot of online content coming only for 360 gamers.
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Carlo Says
Will the 360’s price cut happen? We can only wait and find out. While waiting, let’s just play our games!
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xboxizzdope
X365 Member
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I'd like to say I think they would do a price cut, but with the way MS has been running the 360 campaign I would say they will probably continue to ignore Nintendo and wait until after the holiday rush. It will probably sell well even without a price cut, and they could jumpstart sales early next year by moving the price cut to Jan or Feb
I have a feeling by the time they cut the price it'll be too little and too late
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Lanhoj
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Id like to see M$ cut all versions by 100$. if done, they'd be the @!*% of the next-gens to be under 200$, which is suppose to be 'the sweet spot', and im sure more people would have 2+ 360's in their home and swap around the HDD.
this fall would be an awesome time, but id say theyd be more likely to do it around February of '08 since this xmas is when they have killer-apps which will move consoles regardless of the price.
and if M$ does cut all versions by 100$ before Sony ... ouch for the PS3.
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ricey
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me and my bro have been hit by 3rl twice and on the same Xbox 360!! luckily we sent it back to microsoft both times and got it fixed for free
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it should be $120, yo.
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Nabu the Wise
Heckler
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I don't see Microsoft dropping the price yet, not with GTA IV coming out so soon (people will buy a 360 just for GTA so there's no reason to have them pay any less). I bet there will be a price cut for Christmas, and likely a substantial one (I'm thinking $100 off of the older ones, maybe $50 off of the Elite). They need to be less than the Wii for Christmas, and have a few family oriented games, and they'll have a much better chance against Nintento for this holiday. I don't think that Sony will be as much of a concern. The price cuts made to compete against Nintendo will work even better against Sony, and I believe that Microsoft's better lineup will be enough to improve the lead they have over the PS3.
No tears from the Sony faithful though. While Sony has crippled the PS3 (I don't see them being number 1 this time) I think their gamble with Blu-ray did win. And in the long run, that should more than make up for the money lost from this round of the console wars.
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insane85
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im having the 3RL problem again for the 3rd time after 9 months since last problem. this is really getting old. my room is in the cool basement and vented area. they better fix the problem soon
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