How important is the $199 Xbox 360?

Microsoft has long acknowledged that it considers $200 the "sweet spot" of console price points. Now that the manufacturer has finally hit that sweet spot with the new $199 Xbox 360 Arcade, we've been wondering exactly what kind of impact Microsoft can expect, historically, in its bottom line. Luckily, Matt Matthews over at Edge Online did all the heavy lifting for us over a year ago, looking at the effect of system pricing on sales numbers in the last generation of the console wars.

The results, as you can see above, are pretty clear. Only 13% of original Xbox systems sold at the $300 price point, and a plurality of sales came at an eventual floor of $150. Sony's PS2 similarly only sold a quarter of its eventual installed base at a price greater than $200 (Nintendo's Gamecube never sold for greater than $200).

Of course, history is an imprecise guide here. The original Xbox dropped under $200 within six months of its initial release, while the Xbox 360 went nearly three years (exactly 1018 days) before hitting the sweet spot. And while the original Xbox also had competition from Sony and Nintendo, it didn't have to compete with "premium" configurations offered by Microsoft itself. Still, we can't imagine being the first current-gen system to be available for under two Benjamins will hurt sales of the system. For now, the unanswerable question remains: Exactly how much will it not hurt?

This article was originally published on Joystiq.