Rumors about an XBox 360 price cut have been floating around forever – in fact, many believed that Microsoft would reduce the price of the console during this holiday season to help buffer against the release of the PS3 and the Nintendo Wii. Obviously, that has not happened – but an interview with Robbie Bach, president of Entertainment and Devices at Microsoft helps to shed some light on the issue.
Batch revealed that Microsoft is currently focused on driving down the cost of the XBox 360 “in preparation for a price initiative that he believes Sony will be unable to follow.” He notes:
“You have look at the economics. You have to ask the question, over the life cycle, who has the cost advantage? Who can price most effectively? Who can reach the price points quicker? That has a huge impact on what gets driven. Because we were out there first, we have a bigger installed base of consoles. We can drive down the manufacturing curve sooner and faster. And because we designed a box that was fundamentally easier to manage on costs, we’re going to have that advantage.”
Bach added that the reason that Microsoft has not reduced the price this holiday season is based on a few simple facts:
- Sony is supply constrained. XBox 360′s are on the shelf, and PS3s are not – ultimately that may be the deciding factor on which console is purchased this year.
- XBox has a much larger lineup of games – including many new successful releases like Gears of War and Viva Pinata.
- Value proposition is better – $299 and $399 vs the PS3 price points of $499 and $599
Bach also mentions that as we push into 2007, the XBox 360 will see the release of Halo 3 which represents the opportunity to move consoles.
So what does this all mean? Based on Bach’s comments, I wouldn’t expect to see a drop in the price of the XBox 360 until sometime after the Halo 3 launch – which will most likely be around next year’s holiday season. It also seems as if Bach (and therefore Microsoft) do not consider the Nintendo Wii as a true competitor. That would be a huge mistake if you ask me.
Click here to read the full interview.
