Xbox 360 price drop to $299 confirmed, Pro phased out

[Arwin]

http://www.microsoft.com/presspass/press/2009/aug09/08-27RedTagPR.mspx

Pro phased out, as expected, but will be $249 until it's gone.

Also, in the U.K. the Elite actually drops to 199 quid, which is much more aggressive.

Interesting tidbit in the press-release:

1 Xbox LIVE Gold Membership will be required for Twitter and Facebook when they are available, and is required for Netflix. Games, media content and Netflix membership are sold separately; a hard drive is required for storage.

Don't think we knew about that already.

 

[Gerry]

http://www.microsoft.com/presspass/...tion isn't exactly overly aggressive I'd say.

 

[Shifty Geezer]

£40 difference between SKUs?? Is it worth it? Why not pull the Arcade from the UK and just offer the one box?

 

[Laa-Yosh]

Price wars... me likes!

 

[DuckThor Evil]

£40 difference between SKUs?? Is it worth it? Why not pull the Arcade from the UK and just offer the one box?

I think they are heavily steering the UK people to buy the Elite now, but want to have the Arcade ready in hand for a prize drop, if the pound gets stronger again.

 

[JCarty]

So there really isn't a price drop:

199 No harddrive
299 60 gig white
399 120 gig black w/ HDMI cables

becomes

199 No harddrive
299 120 gig black

The 299 model got a drive upgrade and a colour change.

Something is seriously wrong if this is all they can come up with in response. The 360 has been in manufacturing a year longer, DVD drive instead of Blu-Ray, no WiFi, cheaper internals like no internal power supply and silent cooling system in the 299 PS3 Slim.

And then there is the 50 dollar a year online fees adding probably around 250-500 million a year that would offset selling the hardware for a loss.

 

[DuckThor Evil]

£40 difference between SKUs?? Is it worth it? Why not pull the Arcade from the UK and just offer the one box?

I think they are heavily steering the UK people to buy the Elite now, but want to have the Arcade ready in hand for a prize drop, if the pound gets stronger again.

Actually it seems like the Arcade got a price increase here too. Arcade is now 209€ and the Elite 269€. It used to be Arcade 189€, Pro 239€ and Elite 299€, so in Europe Elite doesn't come down to the previous Pro price point like it does in the US. The previous Pro price point was quite aggressive though.

 

[Shifty Geezer]

I think they are heavily steering the UK people to buy the Elite now, but want to have the Arcade ready in hand for a prize drop, if the pound gets stronger again.

Good point. I even said earlier they could be putting the Arcade up now to have a drop before Christmas for psychological impact. Rather than remove the SKU, up the price and stockpile, then drop it at the right time.

 

[Nesh]

The PS3 now looks more competitive and more comparable in terms of value to the 360 in the US.

It is priced the same as the Elite, offers anything the Elite offers but also includes Blu Ray functionality + free online service

The Arcade may be cheaper but you pay less to get less than either Elite or PS3.

In EU the PS3 is just a little more expensive than the Elite.

Sounds like a bargain and a better choice now for many.

 

[infinity4]

if they dont include audio dongle it will make no difference to how much you pay... if you need it. I think you have to buy MS HDMI cable with it costing around 30GBP.

 

[DJ12]

Only price matching the PS3 suggests MS cannot really go any lower on price with the current package.

Anyone looking at the boxes now is going to see the PS3 is the much better value so I'm sure if MS could've gone lower they would've.

It's slightly lower in the UK but the pound is still strong against the Dollar so I'm guessing that's why.

This round to Sony then. Lets see if that is reflected in sales in the coming months though.

 

[Brad Grenz]

Oh, absolutely. People have been talking for 3 years as if MS could maintain a permenent pricing advantage over the PS3, but Sony's superior engineering experience suggested, to me at least, that they would eventually close the gap. MS was in a race to the $200 price point, but they just don't have much pricing flexibility left.

 

[Rangers]

Oh, absolutely. People have been talking for 3 years as if MS could maintain a permenent pricing advantage over the PS3, but Sony's superior engineering experience suggested, to me at least, that they would eventually close the gap. MS was in a race to the $200 price point, but they just don't have much pricing flexibility left.

Sure they do, they can take the Arcade to 179, 149, 129, and eventually 99. IMO the Arcade with commodity pricing is their best weapon. They probably just dont feel they need it. Or at least, they will wait for some sales figures to see.

One thing I think they should have done that seems like a no brainer, would be up the Elite HDD beyond what the PS3 offers. Laptop HDD sweet spots are doubtless getting higher all the time. So a 250 or even 320GB HDD for Elite would have been a nice move to give it some advantage over the slim PS3 imo, without lowering the price.

Dont forget MS should also come out with their usual holiday game bundles soon, which in the USA is 2 games free with Elite and one with Arcade. That should also help the current perceived value proposition versus PS3 a bit.

I dont expect PS3 slim to garner much more than sales parity with 360 if that in the coming months, in the USA. We already have some hints of that with NPD's suggestion that slim might raise PS3 sales 40-60%. At last months figures that will still leave them at parity or a bit behind 360. Another factor that will help MS for a month or two is all the clearanced Pro's available for 249 while supplies last. I think ODST will help hardware sales as well this fall.

I think where I'd worry more about 360 is in Europe, though. I have little doubt they can maintain sales parity at the least in the USA at current pricing, but not so much Europe.

 

[liolio]

So it's official the elite replace the pro sku. Actually makes why bumping the pro when you have already the elite. Overall I guess the price won't have the same effect (for now) in Europe and US (Japan as far as Ms is involved is pretty much out of the picture). In Europe the price doesn't change you only have more but the price gap is reduced by 100euros only leaving a 50 euros advantage to MS. I don't think that the elite cost significantly more than the pro SKU so I no reason to think that Ms won't continue to offer its 40 euros traditional rebate for christmas. Overall I think that Sony will regain the lead here on a per month basis till this fall. Things could get worse latter on with GT5 and others games, so I pretty much agree with Square analysis ps3 price may have its real effect in 2010, before it will be more about catching up in Europe.
In US it's different Ms is well more established and it looks like they are not really threatened by Sony move.
Overall I feel like Ms think that they can live with ps3 price cut. They have already been in this situation (outsold for some months) and they wait the proper time for them (most likely financially) to do a real answer to Sony moves. This is more of an adjustment than anything, it's doesn't qualify as a price drop.

Other than that I have no clue about the arcade SKU sales but bumping the price is stupid... no matter they offer a game you miss a lot... for only 50euros/$ doesn't really makes sense to me... Anyway they will see what happen...

Overall it looks like MS is waiting the next revision of the system to make an aggressive move. On top of they may bet that current economical state with the market trending down will amortize the difference that could have been made in better situation.

 

[deepbrown]

Sure they do, they can take the Arcade to 179, 149, 129, and eventually 99. IMO the Arcade with commodity pricing is their best weapon. They probably just dont feel they need it. Or at least, they will wait for some sales figures to see.

I don't know how you can say that when they just increased the price by £30 in the UK.

 

[Rangers]

I don't know how you can say that when they just increased the price by £30 in the UK.

I dont live in the UK so I cant comment on that. I guess they felt sales could support it. I noticed Sega Superstars Tennis in one of the recent UK Chart Track top 40's, which usually would signal the Arcade hardware is moving well (it's bundled). Or maybe it's a currency thing. Nintendo supposedly upped the price of Wii in UK as well.

BTW I am not saying they will hit any of those price points now. I am saying those are remaining points they can hit in the future. In response to the comment that MS is "running out of pricing moves" or something to that effect. The 360 is 4 years old. A hypothetical $149 Arcade shouldn't cause any gasps historically at this point, especially given they have a much higher priced SKU as well.

The fact is we dont know the profit loss situation of any of these corporations. Perhaps Sony is losing $50 per slim, but felt desperate to make a move (given the gloom around PS3 and Activision's comments) while MS is making $50 profit per 360 and wants to continue rather than gain market share. Am I saying that's the case? No. I'm saying we dont really know whats going on.

Anyway if you figure that the PS3 and 360 are fairly equivalent machines, the only real cost difference is Blu Ray vs DVD. I dont think it's all that amazing that that difference, after almost 3 years, has come down, allowing PS3 to be more price competitive. It wasn't long ago I wondered why PS3 was priced so high at 399, and yet Sony still seemed to be losing a lot of money on it. If you look at it now, 360 has a 199 and a 299 SKU, PS3 has a 299 SKU. That doesnt seem extreme given how far the Blu Ray cost has surely decreased. It seems about right, perhaps. 360 is probably selling for "on average" $250 and PS3 $299. Again about right for the Blu Ray difference at this time.

I still would think MS may not be done. With the pro now at 249, a gaffer commented that they should have ditched the Elite and kept a $249 pro instead. I kind of agree. But I wouldn't be too surprised to see a 179/279 or 179/249 move from MS after the Pro stock is depleted, though I'm not necessarily expecting it.

Natal complicates all this as well. I wouldn't be surprised if MS is thinking something like "well we'll coast another year, not minding if PS3 outsells us, and then Natal will bail us out" or something to that effect. I think that would be stupid, but they might be thinking it. After all Sony certainly took a lot of lumps over the past year with PS3 at $399. I suspect MS have something really big planned for Natal, a total console relaunch with possibly a revamped "slim" 360 and all that in late 2010, so who knows.

Just looking and the Arcade is £134.99 at Amazon UK, so you're saying it used to be £99? Seems unlikely. Now that I think of it I believe the pound is strong and this is why Nintendo raised prices also.

 

[liolio]

I don't know how you can say that when they just increased the price by £30 in the UK.

From my understanding not only in UK sadly (or it could be french sites translating Pounds to Euros).
It's supposed to be 199 euros now when it was 179euros before, maybe it's UK only and currencies are the reason behind this move.

 

[obonicus]

Sure they do, they can take the Arcade to 179, 149, 129, and eventually 99. IMO the Arcade with commodity pricing is their best weapon. They probably just dont feel they need it. Or at least, they will wait for some sales figures to see.

Bolded is mine. That's the key. Like Carl I think the Arcade is a loss-leader -- would losing more money at $179 push that many more people to buy the system?

Also, and maybe this is what Brad was referring to -- has MS been able to put the same amount of effort towards making the 360 cheaper as Sony has for the PS3? Sony hasn't had to deal with trying to fix the RROD issues, which must've consumed some of MS' engineers' time. Yeah, going to smaller processes will help, but is MS confident enough to put the 360 in a smaller form factor?

 

[DJ12]

Does bundled software count towards sales figures?

I'm not so sure it does.

 

[Rangers]

Does bundled software count towards sales figures?

I'm not so sure it does.

I'm almost positive in Chart Track it does. It does not in NPD.