Microsoft's Robbie Bach calling out Xbox 360 price cuts?

Ah c'mon, we all knew this day would come, but the sooner the better, right? While an Xbox 360 price cut has likely been in the works for some time now, it's no surprise that it hasn't happened quite yet. With Sony's latest gig coming in well over what Microsoft is asking, there's been no reason (yet) for Microsoft to take an even bigger loss (at launch, at least) on each console sale. Nevertheless, it seems the time is drawing nigh, as Microsoft's own Robbie Bach has stated that bringing down the costs associated with the console is "the first order of business." He also boasts about the 360's "larger installed base," and claims that its "fundamentally easier to manage on costs," insinuating that those price reductions would soon be passed onto the consumer as the Xbox 360 hits its second holiday season in full stride. This latest round of price yapping comes on the heels of European stores slashing bundle prices (history repeats itself?), offering the Premium console and Gears of War for an "unprecedented" £269.99 ($520). Although we aren't certain as to when Gates and company will indeed chop prices on its next-generation machine, we'd suggest holding off just a bit longer if you're already leaning this direction.

[Via MCV]

[sw @ Nov 27th 2006 2:57PM]

microsoft should cut them asap.....look at the $100 amazon deal = yes, they will lose money on the console BUT they will make it back eventually buying all those accessories and games while building a bigger fan base.

[Matt @ Nov 27th 2006 4:27PM]

While your thought process is on the right track, it's not nearly that simple. True, cutting prices will surely expand their user-base, but the user-base is already expanding. Cutting prices would speed it up, but will it be enough of an increase to justify the expense? And furthermore, how would that situation compare to cutting the prices later, when the production cost is cheaper? And what about the competition? A price cut can be a strategic move against a competitor. You wouldn't want to waist it at a time like this holiday season when Sony's supply chain is running dry.

Obviously Microsoft will cut the price eventually (I would expect sometime between March and September next year), but it's foolish to suggest that they should do it now.

[Tim Stanley @ Nov 27th 2006 3:02PM]

I'm waiting for it to drop, then getting a premium, hopefully it will be soon.

[Jason @ Nov 27th 2006 3:07PM]

Waitting on a drop and the new chip process here too...

[JP @ Nov 27th 2006 3:09PM]

I saw a indirect price cut at walmart in the form of a $50 gift card for buying a xbox 360 premium console

[zainali @ Nov 27th 2006 3:09PM]

so what does that converted into $?

349.99+tax for gears or war and a premium? or higher?

[sygyzy @ Nov 28th 2006 3:02AM]

"zainali @ Nov 27th 2006 2:34PM

so what does that converted into $?

349.99+tax for gears or war and a premium? or higher?"

It says right in the article.

[Andir3.0 @ Nov 27th 2006 3:10PM]

First order of business: If it doesn't sell, reduce the price if you can.
Next up: Free, with the purchase of ______ months of _____ service.

Apparently it's not doing as well as they'd like?

[JinKazama @ Nov 27th 2006 3:19PM]

MS could end the console war today if they dropped the Core to $199.00 and the Premium to $299.00.

With Sony's slow start, Sony's few exclusive titles, and the graphics looking basically the same. MS would bury the PS3 with a price drop

However if they wait to say next Christmas, let Sony get some momentum, let developers really harness the power of the PS3, let gamers get their hands on a PS3 they may be in for a fight.

Contrary to popular reports the PS3 is an impressive piece of tech. This time next year Sony, just like MS did, will have a heck of a console on its hands. Nobody will care though if they all own 360s.

C'mon MS drop the price...it's not like you can't afford the loss, the Xbox division hasn't made any money anyway.

[Michael Pavone @ Nov 27th 2006 3:43PM]

"First order of business: If it doesn't sell, reduce the price if you can.
Next up: Free, with the purchase of ______ months of _____ service."
It's important to note that he said the first order of business was to reduce the cost not the price. That's the cost to Microsoft, not the end user. Since the manufacturing costs for the 360 are still relatively high compared to the retail price (though not nearly as bad as the current situation with the PS3) Microsoft has a vested interest in reducing the manufacturing costs of the console regardless of whether they choose to reduce the price.

Personally, I doubt we'll see 360 price cuts until next holiday season unless Microsoft decides they need to better compete with Nintendo on price. The most I would expect is perhaps the Core getting the 20GB drive and the Premium getting a larger drive and even that I wouldn't expect until early 2007. Sony isn't in a position to cut prices on the PS3 anytime soon (assuming iSupply's estimates are in the ballpark of the actual figures, which is a reasonable assumption) and I don't see any evidence that Blu-ray is going to be a major selling point for a large portion of the overall market anytime soon.

"Contrary to popular reports the PS3 is an impressive piece of tech."
The Cell is certainly an impressive piece of hardware, but it remains to be seen how well suited it is for games. The PS3 is also saddled with a GPU that is arguably inferior to the 360's.

[Dan O'Leary @ Nov 27th 2006 3:44PM]

I'd rather play Wii with my wife, and play FPS games on my computer than settle for a 360. No offense to the 360, but Ventrilo plus a mouse and keyboard are infinitely better than a controller.

Look for this in February, after all the kiddies how used their post holiday gift cards, and 30 day best price guarantees from Christmas are long gone.

[raulr @ Nov 27th 2006 3:45PM]

"JinKazama @ Nov 27th 2006 3:19PM

MS could end the console war today if they dropped the Core to $199.00 and the Premium to $299.00."

I like this, but would add a Ultra system with integrated HD-DVD and HDMI out for $399. I can wish can't I.

[andy @ Nov 27th 2006 4:01PM]

raulr @ Nov 27th 2006 3:44PM
"I like this, but would add a Ultra system with integrated HD-DVD and HDMI out for $399."


Hear here. Sign me up for that preorder.


I'm sticking with my modded XBOX (XBMC rules) until an Ultimate or Platinum comes out.

[Usman @ Nov 27th 2006 3:45PM]

Here in Tustin CA, MicroCenter already has a $100 mail-in-rebate on premium and core systems ($299 and $199 respectively). And they have them in stock too.

[Ryhian @ Nov 27th 2006 3:49PM]

I dont see a price drop happening until they start selling the new batch of 360's with their own cheaper manufactured parts. Dropping prices now would help a lot since its so hard to obtain a PS3, but I think their sales are still doing ok for the time being to take a huge loss on the 360.

[McHoffa @ Nov 27th 2006 3:52PM]

if they really are making a profit on them, they could cut the price by $75, break even, and be in competition price-wise with the wii, but spec-wise be way ahead...

[Ken C @ Nov 27th 2006 3:56PM]

Well yeah they just got 1,000 new owners last Thursday in 29 seconds. But yeah with a deal like Amazon had (It was Amazons loss not MS, MS still made every last dime they normally make on the 360's that Amazon sells.) and with the Wii at $250 and gaining ground it makes sense for them to do that.

[v1m @ Nov 28th 2006 3:48AM]

"MS still made every last dime they normally make on the 360's that Amazon sells"

Which is, of course, nada.

[Jason W @ Nov 27th 2006 3:58PM]

price drop will come in march/april just like last gen...

interesting this time it's MS making Sony bleed unlike last gen where it was the other way around. You know Sony will match MS' cut.

Your ultra system would be at least $200 higher than the current platinum system, not $100.

All buyers would be well advised to wait for the 65nm chip 360's. The 90's are burning out in large numbers and frequently. Maybe the 65's will come with a smaller power brick - that would be nice.

[MarxMarvelous37 @ Nov 27th 2006 4:08PM]

The strategy that MS will most likely use is pretty apparent:

1) Don't drop prices this holiday. Why would they when their main competition is supply constrained? This will allow them to still sell a bunch of consoles (all that holiday generosity) at their premium price.

2) When market slows down next year and the PS3 start to come in plentiful supply, drop the price $100 on both SKUs.

3) By holiday '07, use the Halo 3 effect and much lower prices to compete with PS3.

[Andy @ Nov 27th 2006 6:08PM]

"The Halo 3 effect"

Love the pun! LOL
http://en.wikipedia.org/wiki/Halo_effect

[klew @ Nov 27th 2006 4:12PM]

Better idea for now would be to keep the price the same and instead, give away an extra controller, a free game, or a marketplace points card. Giving away stock is better than taking in less cash.

[Mike @ Nov 27th 2006 4:23PM]

The local FYE was selling the premium system for $360 for quite a while this year, but bumped the price back up once the holiday shopping season started.

[Stephen Lang @ Nov 27th 2006 8:08PM]

I don't think it's foolish, after as you say it does depend on many different factors, most of which we can't quantitate in any meaningful way.

A price drop this XMas season could sway a lot of fence-sitters, and parents who would otherwise wait for more expensive PS3 stock, or get a Wii. Thus rendering a PS3 price drop next year moot, as the much larger 360 user base drives game development towards that platform.

But I don't know how many more sales they would get, or what their margins are with current 360 pricing. Obviously, if MS is supply-constrained then it would make even less sense. But a 'pre-emptive strike' could have given MS a definite leg up over Sony this holiday season.

[omoks @ Nov 27th 2006 4:33PM]

Pure business 101. Sony isn't in short supply of the PS#'s. It was intentional. All PS3 first gen buyers are beta testers. I'm not a Sony fan for anything.
The 360 is amazing. Microsoft built their console from the ground up. They had to gain the respect and trust of their fan base. Anyone who has a XBox is pretty much loyal.
Sony on the other hand also has a long time fan base who is yearnning for something different. Apart from the hardcore Japanese fans, in the States and Europe, Sony has to work to keep the fans.

[Kevin @ Nov 27th 2006 4:36PM]

As Usman pointed out, I got my Xbox 360 at the Cambridge, MA, Micro Center last week. They are offering a $100 rebate. Bought the premium package for $299 (after rebate, of course). I am a happy Xboxer now.

[stu @ Nov 27th 2006 4:49PM]

I'd agree with March/April... this would come right when Sony predicts their product shortages will go away and it also is just after Vista drops... MSFT could do some cross-promo marketing showing how Vista and Xbox work together to create a great media center solution... this would also help MSFT build some momentum in this market before iTV from Apple comes on the scene

[E Malave Jr @ Nov 27th 2006 5:07PM]

I'm waiting for a price drop on principle alone.
I've purchased thousands of dollars of a/v and computer stuff in the last year but can't bring myself to pay the original price on the Premium 360 because I think stand alone game consoles are overpriced--value wise. For the price of a better video card and some extra RAM you can match the 360 or PS3 closely enough to think twice about making the initial investment in the console (remember, not everyone has an HD capable TV, some people are putting their consoles on old ass TVs so PC games are the closest they can get to HD quality pictures). I know they take a loss on the equipment but I also know I went through $200 worth of controllers (wireless, s-type, 3rd party, etc.) for my regular XBox so I'm sure they'll make up for it in the long run. Just add up what it takes to enjoy the 360 for a year (live account, controllers, games-I buy, I don't rent) and you have a break-even situation.

Come'on Bill, you saved enough $$$ on lawyers by making a deal with your main competition: MikeRoweSoft, that you can drop the price right now. My MCE equipped comp and Toshiba Gigabeat S are waiting.

[bobby @ Nov 27th 2006 5:16PM]

if they hit the 250-300 for the 20gb my wii's going onto ebay and i'm getting an xbox and a bunch of games...

[tiuk @ Nov 27th 2006 5:57PM]

This past Sunday at Walmart my girlfriend picked up a core system for $295 Canadian (plus tax), as my Christmas gift. That's a little over $100 cheaper what they usually run. Either Walmart was clearing them for some reason, or possibly testing waters on a price change.

[Z @ Nov 27th 2006 6:13PM]

A price drop is great, but I won't buy a 360 until they offer a model where they've integrated the HD-DVD drive. External drives are lame.

[Phil @ Nov 27th 2006 6:17PM]

I don't know how much an XBox360 price cut would really negatively impact PS3 sales. I know about 100 people waiting to get a PS3, and they are so dedicated to the idea of having Sony's machine that XBox360 price changes wouldn't change any of their minds. They might get both consoles (Sony's at the current price and Microsoft's at a reduced price) if XBox360 was low enough just so they could play Gears of War, but no way will they give up on the idea of having the PS3.

I have neither yet. I am sitting with my XBox1 and PS2 this holiday season. I like the XBox360 as a better-priced machine with a must have game (Gears of War) and great networked media center capabilities. I like PS3 because it is MUCH quieter and less heat-generating and is the only real candidate for an always-on living room machine with high-def movie capability on my HDTV. I also like that I could put Yellow Dog Linux on the PS3 and have web browsing, OpenOffice, Linux games and emulators, etc. on my living room HDTV as well.

I am not the typical consumer though. What I really need is a game that's not a shooter or racer (no matter how beautiful the graphics) so that my kids can use the next-gen too. Psychonauts, SpongeBob SquarePants, and OddWorld are the games that make the XBox1 a family machine for us. With that and me using the Halo games the PS2 is hardly ever used. But the majority of console consumers don't care about the family - they want to shoot and race - as evidenced by the poor sales of excellent XBox1 titles like Psychonauts and OddWorld.

But if just one really awesome kid-friendly game like Psychonauts, but with next-gen graphics and gameplay, came out for either machine that would probably make me buy. If the same title came out for both then I would have to choose between having Gears of War for me or having a cool Linux box in the living room. Or getting both and seeing which one sits unused like my PS2 does now.

[iceman2929 @ Nov 27th 2006 7:35PM]

phil, check out Viva Pinata for xbox 360, apparently its supposed to be quite an entertaining game and fun for the whole family!

[Phil @ Nov 28th 2006 2:56AM]

Thanks iceman! I just looked at the Viva Pinata web site and it looks cute and fun for my younger nieces and nephews, and I will buy it if I get the XBox360 so they have something to play when they come over. MistWalker may be the one for my kids, though. If it is less battling and more problem-solving then it could be just the thing to make me buy XBox360 for my home. And the art looks incredible. Maybe a 360 price drop will happen close to the MistWalker release.

[brian @ Nov 27th 2006 9:01PM]

i dont think microsoft should cut the prices yet, at least not until the holiday season is over; and i doubt they will. its called strategic marketing...i actually wasn't expecting a price drop until early 2008. i'm surprised they are already talking about it this early. but around the holidays, people are much less worried about price, so i'm pretty sure when they do initiate a price cut, it won't be during the holidays.

[en @ Nov 27th 2006 9:26PM]

waiting on Halo 3 and a price drop...

[Inferno @ Nov 28th 2006 12:23AM]

This is how things are going to go in the next 395 days. Make note, this has been fortold by me...

You will not see a 360 price drop this year. The 360 is the only console on store shelves this holiday season. In April or May during a pre-E3 press conference, you will see a $50 price drop on both SKUs of the 360. This would make the Core $249, which matches the Wii and cause Nintendo to reduce it's inferior Wii's price as well. Probably to $219.99 (At which point I will be buying one). Ninty will be reluctant to lose profits. And will not make the annoucement until E3 as if it was the plan all along. At E3, Microsoft will announce a release date of, you guessed it, Halo 3 (Holiday 2007) and an announcement of whatever Peter Moore's Halo project is. This will reinvigorate the sales throughout the summer and when gameplay footage of it are shown, there won't be any gameplay footage on the PS3 that will be able to top it. Sony, although they will still be taking an @$$-pounding loss per console sold, will end up cutting the cost of the $499 unit, close to the equivilant cost in Japan, around that same holiday time period.

I have spoken...

But seriously, the last half of that, I wouldn't bet on. But I would bet on 360 dropping price at E3, and Ninty following suit. PS3 needs to try to at least approach a mass market price point, so they may follow suit.

[Peter Steffens @ Nov 28th 2006 1:24AM]

I'm waiting for the smaller redesign and price cut

[Dave @ Nov 28th 2006 10:47AM]

MS is making a profit on XBox360s -- I read an article just the other day on how they've slashed manufacturing costs and make approx. $75/unit now.

Oh, and they had a huge sale in Canada on PS3 launch days. I picked up a premium with RidgeRacer 6 and Gears of War for $450 worthless Canadian dollars.

[Murc @ Nov 28th 2006 6:41PM]

DAMMIT, I just bought one a couple days ago!

However...MS is just turning in a small profit from the console...so I dont think they want to loose that. I would expect in a month or two that both the core & the premium will have a $50 price frop...most deffiniatly not $100.