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Xbox 360 will get price cut


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September 7th the price will drop

Well, if you just purchased an Xbox 360 20GB Pro system when Microsoft dropped the price to $299, you might be in for a bit of disappointment, as we have been able to confirm from a very reliable source that on September 7th, Microsoft will be dropping prices. We expect that this will be the first aggressive shot that will start a price war among the console vendors.

The September 7th price drop will see the low-end Xbox Arcade system move to a $199 price point. With the new 60GB version of the Xbox 360 Pro system moving to a $299 price point the Xbox 360 Elite will move to a $399 price point.

There will be at least some unhappiness surrounding this price drop to those who dove in at $299 for the 20GB Pro system when Microsoft was clearing out inventory. Still, we expect that Microsoft will announce that it will start selling the 60GB hard drive separately or drop the price on the 120GB hard drive to a bit more affordable level.

The big worry is that Microsoft can’t afford to drop the price this much and still turn a profit. The reality is that with all of the recent moves by Microsoft to reduce the overall cost of the Xbox 360 platform they should still be able to turn a slight profit to break even on each Xbox 360 that they sell. The only exception being the $199 Arcade system where they likely break even or lose $10 to $20 on every console sold, but they make it up on software, accessories, and subscriptions/points that these customers buy.

We do believe that this is the first round in this holiday season’s console price war. We are expecting with this move by Microsoft that they are going to be aggressive in trying to attack not only the Wii, but also the PlayStation 3, to build additional market share; and they obviously do believe that price is still the dominating key factor beyond exclusive titles that go into the decision making process on which console consumers will purchase.

Last modified on 04 August 2008
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