Back to reality. It's pretty likely we'll see X360 Pro at $299 and X360 Arcade at $229 right around the time of the 65nm switch/GTAIV launch. Then I think they'll stick to that until 2009.
So you think they'll drop the price only once next year, and not significantly?
I take it that you don't believe that the 360 or the PS3 are competing for the same audience as the Wii, then?
There's no real reason to slit their own throats by being too aggressive. Sony can't get to $299 anyway and Blu Ray doesn't have enough traction to make up the $100 difference.
But is that really a determining factor? Does competitor pricing continue to dictate their own pricing strategy for an additional year? Clearly, competitor pricing is what allowed MS to maintain the high (relative) price of their console through 2007.
But there are other factors that come into play, such as the huge hit that MS took due to the warranty and failure rate issues.
Let me ask this question then.
Based upon your position and your current thinking, do you believe that MS would have priced the console more aggressively in 2007 had they not had the manufacturing/return/warranty issues that they encountered?
It seems to me like you are saying that they wouldn't, and I believe that's questionable. I believe if they didn't have the costs associated with the failure rates, they would have dropped the price $100 instead of just $50 this year.
Clearly that's an opinion and entirely speculative. I have nothing to base that on, other than the fact that I believe there really is a magical $199 price point and that MS's strategy from the onset with various sku's has been to reach that $199 price point as quickly as possible.
You're saying that we won't see the Core/Arcade at $199 until sometime in 2009.
I believe that is the price point that major adoption actually takes place, and I find it difficult that MS wants to or is willing to wait 4 years from launch to hit that price point.
I think they probably planned to do it THIS year, but the hardware failure rate and the resulting costs forced them to delay it. The PS3's high cost of entry allowed MS to delay the process and ride their higher price point to recover those costs.
But as I said originally, I still believe that MS wants to play "catch-up" at some point, and it's logical that time would be during 2008.
I do agree that Sony is in a very difficult position with the PS3 and when they can afford to drop the price again. But they've botched the release from the very start (probably even from the design phase), so they are always going to be a step behind.
Nintendo can obviously afford to drop the price of the Wii whenever they want. They're making money on the consoles from the start, and they still can't meet demand in every market. Even regional markets. I've just recently moved from one part of CA to another, and where I was before, I couldn't find a Wii. Now, I can walk into a store and pick one up whenever I want. So it's clearly a regional issue, but it's still a manufacturing issue. And I don't think Nintendo needs to drop the price of the Wii until demand is met and units are sitting on shelves for weeks at a time.
