Today, Bloomberg has a report that says:
That may mean a price cut heading into the holiday season to spur sales of games, which do make a profit, [UBS AG analyst Heather] Bellini said.Short of an actual announcement of an Xbox 360 price cut, I couldn't have timed that any better.
She expects a price cut as early as September.
"We are well aware that the sweet spot of the market is really 199 bucks,'' said David Hufford, a director of Xbox product management. Sony sold 75 million PlayStation 2s at or below that price.
If you selling at a loss the company usually has a formula that tell them if we sell a system at this price a customer must by "x" amount of games on average for us to see a profit. I'm not MS or Sony's accountant but I'm guessing that both companies are in the situation where they need everyone to by 10 games on average which is very high, but if they drop the price without being able to drop manufacturing cost they will actually exceed any sort of logical gamer buying habits.
In simple terms MS and Sony likely face a situation where they will never make a profit and might lose billions. So what do they do? Honestly I think dropping the price offers no solution its just makes the hole bigger. And if people want a 360 Elite or PS3 60GB for $300 that hole is going to be so huge it not worth doing. It might actually be cheaper to let the systems trickle off the shelf. That way it is not them “quitting” on the systems, an irrecoverable PR nightmare, no it would be consumers not buying systems as fast. Meanwhile the cost of part will drop and slowly they can drop the price. The companies would actually lose LESS money selling a trickle of systems in the next two years.
A $400-600 machine might not make the high end of the market happy, but I think there is a point where the early adopter crowed must support these higher level price tags, or what the industry will turn into won’t be “fun” at all. Like I said the consumer isn’t obligated to buy anything, but the market is what “WE THE CONSUMER” make of it. The consumer is part of the circle and we have to take responsibility for our part. Sony and Microsoft can’t sustain spending $2 for every .25 cents of profit and that looks to be the situation. Consumers need to spend money to make the marketplace work otherwise they will get the market they deserve
It is gallows humor, but I think it is would be funny if the consumer drives Sony and MS out of gaming and drives the developers and publishers out of high end games. Because then the hardcore consumers can play Nintendo’s and Strawberry Shortcakes “Sweet Adventure” all year long with their pockets full. We can only reap what we sow, and I think the people who want serious adventures, rpgs, deep shooters, and hardcore racing games need to swallow their pride and support the end of the market that will give that too them. Otherwise they can sit around playing the “easy games” until the casual gamer makes moves elsewhere and all that is left if the hardcore gamers and a marketplace unwilling to make big games, unwilling to make better hardware, and market that is a mere showdown of itself.
$400-600 is not a lot of money. It really isn’t given ether current economy; it is even a cheap price point for what you get. Don’t agree, that fine just don’t whine when the marketplace produces nothing you want and your choice is: this casual innocuous E rated game or that innocuous cheap looking E-Rated game.