Price Drops in 2007?

[Shifty Geezer]

Sorry, I should've been more clear. I am only talking about the console space. Price is definitely used as a strategic tool in other markets...

I mostly go along with that, though I wouldn't rule out absolutely the idea of one console company using price to out-manouevre a competitor even when demand is higher than supply. If MS could afford, and they build up the reputation and software to appeal to everyone, they could drop the price and have everyone giving up on PS3 and waiting to get an XB360 instead, even when supply is exhausted (unsubtle hypothetical scenario - who would buy a PS3 now if XB360 was dropped to $100 and offered the titles you wanted?)

 

[Bobbler]

(unsubtle hypothetical scenario - who would buy a PS3 now if XB360 was dropped to $100 and offered the titles you wanted?)

If 360 offered (all) the titles I wanted, a further price drop would be sort of moot. I'd have no reason to get a PS3 to begin with.

As it is, I have a 360 already and will be picking up my PS3 at launch, because of the fact that 360 doesn't offer all the titles I want (and likewise for the PS3, although PS3 does offer the significant portion of them). And the PS3 is just sexy, so I need it...

 

[London Geezer]

I mostly go along with that, though I wouldn't rule out absolutely the idea of one console company using price to out-manouevre a competitor even when demand is higher than supply. If MS could afford, and they build up the reputation and software to appeal to everyone, they could drop the price and have everyone giving up on PS3 and waiting to get an XB360 instead, even when supply is exhausted (unsubtle hypothetical scenario - who would buy a PS3 now if XB360 was dropped to $100 and offered the titles you wanted?)

If a console offers the titles you want, you will get that console regardless of price differences.

People on here get too hung up on pricing (for obvious reasons, it's one more thing to bitch about when siding with one company instead of the other). At the end of the day pricing for consumer durable products (like consoles, or TVs or all products you research into before buying, usually the expensive ones) will always be less sensitive to price than what we call FMCG's (fast moving consumer goods, things like bread, soap and all those cheaper goods you buy frequently).

Consumers don't buy the products because of the product itself. They buy the benefit they will get from that product. In this case, the benefit is the fun (or eye-candy for some) they get from the games. If that need is satisfied by the 360, they will buy a 360 whether it's 100 quid cheaper than the competition or not.

Likewise, if they want what Sony has to offer, they will buy that one instead. Besides, today we hardly have problems buying things even when we can't really afford them, and it's getting worse (credit cards and whatnot).

Really, pricing is a complete non-issue in this market, to a certain point.

 

[AzBat]

MS secret services sneaking into our houses while we're sleeping, sticking an HDMI port on our 360's??


Seriously though, even the thought of "retrofitting" existing 360's to have an HDMI there is out of this world. If they didn't sort it out with the HDDVD player add-on, they'll never sort it out. The only way out will be a completely new SKU. Old 360's will be HDMI-less forever unless a miracle happens and somehow the Multi-AV port starts outputting digital signals.

Latest rumor:

You know how other Web sites and magazines have their own “mole� Well, we have our own as well. This person is fairly deep on the inside and will of course, always remain anonymous. But, fear not, our mole is legit. So, although what we report from zee mole should be considered a rumor only, do put a little bit of stock into it. So, one of the first big waves the mole drops on us has to do with Microsoft and some major announcements due around the pivotal shopping period of Nov. 22. Here’s a look:

• On the hard drive: They are going to announce and release 80GB or 100GB hard drives, but not sure yet which one but possibly both. As well as the future 160GB and 200GB options.
• Cables: HDMI cables and prices should follow this hard drive news. Expect a $69.99 price.
• Game price drops: The Outfit for the 360 is dropping to $10 at Best Buy “FOR SURE.†It’s also a solid rumor that many will drop to $15 and $20 through the holidays. Madden 06, PDZ, THUG, King Kong, NHL06, Ridge Racer (already is) and most dated sports games.

So there you have it. Expect big things from Microsoft in the next couple weeks and remember where you heard it first. That’s right, here at Destructoid.

http://www.destructoid.com/rumor-de...-microsoft-announcements-coming-around-nov-22

As always, a pinch of salt goes a long ways.

Tommy McClain

 

[patsu]

Based on recent MS moves, I think the following are more likely:

* MS stacking up more services and bundles to compare favorably with PS3 at the current price point. No price drop unless PS3 adjusts. This is especially true if GoW can push boxes like Halo 3.

* Price adjustment probably end 2007 once things settle down and MS has a clearer view on how all the value-added services perform in the market. e.g., if all the value-added services perform below expectation, then they may drop the hardware price earlier to stimulate newcomer.

That's my guess anyway.

As for HDMI rumor, I heard it 3 weeks ago during my recent trip to Singapore (They have pretty active Xbox 360 marketing activities there). Some guy with close connection to MS and the media industry advised me to hold off Xbox 360 purchase because a HDMI box will be released soon. Unfortunately, the same guy also gave me wrong info about PS3 and Xbox 360 capabilities (I forgot what). So I wrote him off.

2007 will be a very interesting year for consumers and Sony ;-)

 

[Pozer]

I dont know why people get excited about the prospect of an MS released HDMI cable for the current 360. You can build one yourself easily.

1. Buy MS VGA cable
2. Buy VGA-to-DVI adapter.
3. Buy DVI-to-HDMI cable.
Make sure you get female/male ends correct.

But true source digital HDMI 360 would be nice. I would definitly trade-in my 360 for that.

 

[pipo]

But true source digital HDMI 360 would be nice. I would definitly trade-in my 360 for that.

I couldn't care less. Both the component and VGA output are great. I like VGA better, but I can only tell the difference on a massive screen with my HD projector.

I'm pretty sure normal human beings would not be able to tell the difference.

Now if your set only accepts HDMI its another story of course.

 

[Shifty Geezer]

If a console offers the titles you want, you will get that console regardless of price differences.

Not necessarily. There's other factors at play like other features, and brand strength. If XB360 and PS3 had exactly the same titles and features, and PS3 cost $50 more, I'd expect PS3 to outsell XB360 because it has a stronger identity. However, if XB360 and PS3 are virtually the same machine, and PS3 costs $600 and XB360 costs $100, people will buy XB360 because the price differential trumps their brand awareness. That's why such a lot of effort goes into trying to advertise brands as well as products - you can offer the same sort of product as rivals and charge more for it, or have a loyal customer base.

This is all just theory in this space. The consoles don't have the same games and features, and won't have, and the XB360 won't be priced at $100 versus PS3's $500. It is still possible to use price to help attract customers from a rival platform though, though only as part of a full strategy of competition - and MS could choose to go that route if they were crazy.

 

[London Geezer]

Not necessarily. There's other factors at play like other features, and brand strength. If XB360 and PS3 had exactly the same titles and features, and PS3 cost $50 more, I'd expect PS3 to outsell XB360 because it has a stronger identity. However, if XB360 and PS3 are virtually the same machine, and PS3 costs $600 and XB360 costs $100, people will buy XB360 because the price differential trumps their brand awareness. That's why such a lot of effort goes into trying to advertise brands as well as products - you can offer the same sort of product as rivals and charge more for it, or have a loyal customer base.

This is all just theory in this space. The consoles don't have the same games and features, and won't have, and the XB360 won't be priced at $100 versus PS3's $500. It is still possible to use price to help attract customers from a rival platform though, though only as part of a full strategy of competition - and MS could choose to go that route if they were crazy.

Sure, brand is hugely important too. However brand recognition only lasts as long as the brand can keep up the quality(or quantity if that was its "thing") over time.

 

[Platon]

I don't think that MS will pricedrop soon, what they will do is have revisions of the hardware for example adding a HDMI and what not but the price will remain the same...

 

[quest55720]

I don't think that MS will pricedrop soon, what they will do is have revisions of the hardware for example adding a HDMI and what not but the price will remain the same...

If you mean in the next few months then you are right. MS will have to drop the price around the time sony gets its production problems fixed. A 100 dollar price difference is just not enough to over come name brand right now. I think a 200 dollar price difference and stripped down 199 sku would give them a chance.

 

[acaeus]

Sure hardcore gamers, such as ppl writting here for ex, will buy the console that carries the titles they want. But they are the minority, the casual gamer, the parents of very casual gamers (kids) will definitely look at the price.

People here and on other boards downplay price, which is understandable considering what our interests are, but in the end price is king.

Also, consider that a lot of people (me!) don't care too much about the exclusives and the titles they want are available on both platforms!

I agree that MS may use a price drop in march to bury the PS3...

 

[patsu]

It's generally not wise to start a price war since in this case, Sony is likely to react like in Japan. If they want to hurt Sony (while they are slower/less likely to react), then they should drop earlier. OTOH, they also have to figure out how to make money (which is more important, really.... unless they want to make it personal).

That's why I think they are less likely to drop until end 2007 where they have ample time to validate/work out their profitability. My guess is still: No drop unless MS has figured out its profitability, or unless Sony starts it first. I can be wrong though

EDIT:

Sure hardcore gamers, such as ppl writting here for ex, will buy the console that carries the titles they want. But they are the minority, the casual gamer, the parents of very casual gamers (kids) will definitely look at the price.

People here and on other boards downplay price, which is understandable considering what our interests are, but in the end price is king.

Also, consider that a lot of people (me!) don't care too much about the exclusives and the titles they want are available on both platforms!

I agree that MS may use a price drop in march to bury the PS3...

Sure, but if Apple can do it with expensive iPods... don't you think MS will try similar tactics ? An Xbox 360 is not much more than the high end iPod (How much is it going for these days anyway ?). They went aggressive by even pre-announcing their video service to jump on Apple and Sony. MS also wants to rev share Zune sales with music companies.

For the value and for the rev sharing and flexibility in execution, they may want to have more margin to play with (for now). They can always dictate when to drop price since they are the price leader now. So why rush ?

EDIT 2:
I just want to add that...
Even though MS may not drop the official/list price of Xbox 360, they can still introduce incentives such as promotions, discounts, coupons, subsidies, rebates and bundles to the consumers or partners. This means that it may be possible for someone to buy an Xbox 360 at lower (final) price.
e.g., Comcast and MS may partner and bring USD 99 Xbox 360 to new Comcast customers who subscribe for 2-3 years.

I have not seen SCEA do this kind of co-marketing (yet ?).

 

[London Geezer]

Sure hardcore gamers, such as ppl writting here for ex, will buy the console that carries the titles they want. But they are the minority, the casual gamer, the parents of very casual gamers (kids) will definitely look at the price.

People here and on other boards downplay price, which is understandable considering what our interests are, but in the end price is king.

Which explains why the Gamecube absolutely dominated the last generation against the more expensive PS2 and Xbox!
Please, if you don't know what you're talking about, don't come out with comments like "which is understandable considering what our interests are, but in the end price is king.", cause you really have no idea what you're talking about and certainly shouldn't comment on people's interests and how they reflect what they post.

It's simple marketing. Price is not king in this kind of market, and the examples are endless. The more expensive Bravia HDTVs are best sellers in a market flooded with "value" HDTVs. The iPod is stupidly overpriced, but still sells many times more than any of its competitors.

 

[Johnny Awesome]

IMO MS is going to drop price by $100 as soon as the PS3 is in ready supply, unless MS is having a hard time keeping stock for some reason (not likely). At the very latest they will drop $100 before the 2007 holiday shopping season. They'll bring out the 65nm process X360 by next summer as well, thereby making the price drop possible.

 

[London Geezer]

IMO MS is going to drop price by $100 as soon as the PS3 is in ready supply, unless MS is having a hard time keeping stock for some reason (not likely). At the very latest they will drop $100 before the 2007 holiday shopping season. They'll bring out the 65nm process X360 by next summer as well, thereby making the price drop possible.

Absolutely. MS will probably only drop the price once PS3 becomes readily available, and even then they will probably be very careful because they risk cutting their profits (or increasing their losses) without actually doing anything to sales.

The best way to improve sales in this market, in the next year, will be releasing a steady supply of VERY high quality games, promote them well so people actually notices them, and in general trying to convince gamers that 360 is where it's at, and not PS3, and price really is not an issue - within range of course!

 

[assen]

The best way to improve sales in this market, in the next year, will be releasing a steady supply of VERY high quality games...

The problem is that this is less under Microsoft's control than the price. Microsoft probably had a plan to release a very high quality game called Too Human this year. And another called Shadowrun. Now the best thing we can say about them is that they were pushed to 2007... or later.

Developing high quality games is a slow, painful and uncertain process. Turning down the price knob is quick, painful, and - as you said yourself - also not too certain. (Before you hit the $199 point, that is - older threads have shown a popular belief that "consoles really start selling well at $199".)

 

[London Geezer]

The problem is that this is less under Microsoft's control than the price. Microsoft probably had a plan to release a very high quality game called Too Human this year. And another called Shadowrun. Now the best thing we can say about them is that they were pushed to 2007... or later.

Developing high quality games is a slow, painful and uncertain process. Turning down the price knob is quick, painful, and - as you said yourself - also not too certain. (Before you hit the $199 point, that is - older threads have shown a popular belief that "consoles really start selling well at $199".)

In marketing terms, and especially for this kind of products, you really don't want to lower the price too much too soon or people will start questioning the quality of the product itself, which would be disastrous in some cases. Especially when Sony is coming out with what they're marketing as the third coming of Jesus Christ, MS really don't want to be the ones who make the "cheaper and crappier" hardware. They need to be the ones who have hardware & software "just as good" as Sony, at a cheaper price, but not hugely cheaper. They need to be affordable, which is different from being cheap.

People who buy these kind of products - and PS3 and X360 are not "just consoles" anymore - want quality, and value for their money, not cheapness.

I'm speaking in absolute marketing terms of course. In the end we'll have to see what happens. Either way, Sony will always cover themselves behind the fact that the price for a PS3 is higher because "it does more", like Bluray playback, whether people care or not. We'll have to wait and see if people do care or not, Marketers can predict only so much, and the best they can do is to get the right mix of product+price+place+promotion to maximise sales. These all have to be taken into account at the same time. Just talking about pricing on its own, like some people here are doing, is absolutely useless. It's the mix of those 4 that in the end makes or breaks a product.

 

[assen]

Hey, by the way, while I was reading london-boy's last post, I just realized Microsoft now can add another deal-sweetening item on the bundle bullet lists: prepaid movie rentals.

 

[acaeus]

Which explains why the Gamecube absolutely dominated the last generation against the more expensive PS2 and Xbox!
Please, if you don't know what you're talking about, don't come out with comments like "which is understandable considering what our interests are, but in the end price is king.", cause you really have no idea what you're talking about and certainly shouldn't comment on people's interests and how they reflect what they post.

It's simple marketing. Price is not king in this kind of market, and the examples are endless. The more expensive Bravia HDTVs are best sellers in a market flooded with "value" HDTVs. The iPod is stupidly overpriced, but still sells many times more than any of its competitors.

I like when people pick the exception(s) to prove a rule... utterly ignoring all other variables. Maybe the ipod should cost $1200 since it would sell as much right? but since you told me not to comment here I will abide... /sarcasm off.

I'm just not sure that $600 is the absolute sweet spot for any gaming console, and a ps3 flop wouldn't surprise me one bit. But WTH I'm just a Joe who can't predict the future.