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

Edit: Yeah it's 199 and 249.

 

In France at least every sites have consulted so far stated 199 euros. It 'still a bad move imho.

I think Obonicus is on to something Ms may have done less effort than Sony in regard to cost reduction. RroD may have indeed stole money for R&D. I see all this an adjustment till their next revision. Right is not that much of a concern but as per Square Enix prediction it may hurt during 2010.
Imho Ms have make a consistent move no latter than the second quarter of 2010, especially in Europe. We heard of the vahala rumour quiet some time, and I hope it's not true, it's a significant (thus costly) effort. They should focus on shrinking instead of introduce for themselves extra headache. Bring the xenon down to 45nm, the xenos to the low power version of TMSC 40nm process. They may even consider switching to GDDR5 and go with tinier bus say 96 or 64 bits.
On top of that they should get rid of the huge metal casing in the 360 and swallow little extra costs and use DVD player from the laptop space instead of the huge and heavy thing they use actually (damned I watched a disassembly video of the 360 yesterday and I was almost laughing after the guy removed the DVD player the damned case looked all of sudden empty ).

 

Why do you think that this is a response and not somthing planned? It has been a year since the last price drop. They didn't wait to see what Sony was doing at Gamecom and then a week later decide to drop the price.

 

I think the price drop was ready and they had the date set till after that games conference in case they had to make more drastic changes.

I think stock of the Pro is probably what makes them confident in their pricing. At $250, the 60gig pro is great deal. I don't think they should have removed the HD cable from the elite bundle, but for whatever reason they're confident about that.

As for Europe, I think the arcade bump might not be a big problem. People keep forgetting the Pro unit is still on the market. They probably have a bigger margin on the Pro and pushing the price of the arcade up, and dropping the price on the Pro will just encourage people to spend that little bit of extra money. Either way, both units are still cheaper than the PS3.

I think MS should be fine over the holidays. If Sony closes the gap, I don't think it'll be by a large margin. NPD should be a little interesting again.

 

Wasn't the price cut confirmed a good while ago by the by now very-reliable Ars mole?

 

A price cut hasn't been mentioned for the Pro in Europe or UK. Only that it'll be discontinued, as it is in the US.

If you want a HDD with your 360, you now have to pay more in Europe and UK than you did before. It's a price increase all round, not a price drop.

 

So they're cancelling the Pro and dropping the price of the Elite, but not as low as the Pro was priced? That seems pretty stupid. I'm a little unclear on what the euro pricing is supposed to be now.

 

At least in Finland the official new prices are 209 for the Arcade and 269€ for the Elite(maybe main Euro countries have 10€ less). Pro was 239€, so yeah for HDD sku you have to pay more once the Pros are cleared.

 

Did the Wii's price go up in the EU as well?

 

To me it suggests they don't have to.

The PS2/Xbox were always the same price and the Xbox, quite obviously, represented a much better value.

It's the games that matter. MS is going to try to keep this pricepoint and see how it works out. If Sony comes close to the 360 numbers -- which I don't think will actually happen, at least in North America -- after the first month, they may consider a true price cut.

Sony needs to do more than have a better console on paper. It needs to have lots of games people want to buy, and if you look at PS3 game sales, that needs a lot of work at the moment.

 

Can't say I understand that decision. Maybe they're going to wait for the Pro to clear out and then drop the Elite into that price point? Since they raised the price of the Arcade, it would be pretty strange to drop the price of the Pro until it clears. I'm just guessing, because otherwise that does not make a lot of sense to me.

 

Wouldn't it be just better to drop the arcade and "move the pro" (as in Arcade + 60gb HDD only) to 200/220 territory instead?

Anyway, today I went looking at some stores and I still found Arcades for 189 euros but two had them for 199. All the Elites (even that RE5 elite bundle) were at 299 while Pros were split between the old price and 249.

 

The removal of the HDMI cable appears to be the most telling part of Microsoft's move.

If they are that concerned about margins to make that change, it indicates that these are the prices as far as they can or are willing to go.

E&D only made 169 million for the year, and a 130 loss last quarter.

And 10 million people paying 50 dollars a year would be 500 million a year. Probably not all continuously active subscribers. So maybe 250 million on the low end to estimate? And then add in all the other profits from addons and 360 services. If they were breaking even on the hardware at the current prices + the rest of the Xbox 360 revenue, E&D should be making significantly more money than they are showing.

Maybe Zune and Windows Mobile are eating up huge amounts of cash, but it looks like Microsoft is still losing a large amount of money on the 360 hardware.

With Sony arriving in Europe 1.5 years later than the 360 with the PS3 but already having passed it in installed base, a real price drop in Europe for the 360 is needed badly.

I don't see how this lack of a real price cut can be seen as 'not want to/need to' but simply 'can't'.

 

Well, when you hear comments like Mark Rein's regarding HDTV to SDTV ratio... selling such cables themselves for a huge profit makes that much more sense. Also note that this is a SKU that will now see much more production than before...

I wonder if anyone still uses the component video connector too.

 

You can't look at the E&D cost and assume heavy hardware losses. There's way too much going on there. Sunk costs into upcoming game development, R&D into the next Xbox console, at least 3 full Windows Mobile OS teams (6.5, 7, "Pink") which are ramping up in both size and cost to increasingly frantically compete with Apple/Palm, Zune HD production rampup and costs, etc. It's a massive division in terms of scope and costs, particularly areas MS is targeting for rapid future growth which means they are seeing extra costs dumped there without offsetting revenues yet.

MS certainly can do a pricecut. It's absurd so say they cannot. They have very, very deep pockets and one only needs to look at Xbox (1) to see that they can cut the price and lose money as a result. They just don't need to. They are making a profit, and they are still outselling Sony in the global market and certainly in the most profitable North American market. Sony, on the other hand, desperately needed to bring down the PS3 cost and COULDN'T pricecut it until they could. They just don't have the cash reserves and profit from other sectors to offset it. Such an aggressive slimming of the hardware on Sony's part is not a condemnation on MS', but desperation on Sony's behalf. It was absolutely necessary for them, it is not for MS.

It's "won't", not "can't" for why MS hasn't dropped the price more.

 

PS3 was more or less all but passed X360 in Europe one year ago and the situation is about the same now. You are implying that the situation is worse for the X360 in Europe when in fact it's selling good at the moment. I agree that the new pricing is a bit confusing, but let's wait until the Pro's are cleared and see what happens then. Ms has a lot's money in their pocket so they definitely can sell it for pretty much any price they want. I think you see it wrongly. This is business after all so going after better margins is not really that odd strategy, even if they don't have to.

 

So it's basically a price increase in Europe...

 

I really think we have to drop this notion that MS is going to throw as much cash as it takes to come out on top. They have expectations, they'd like to reach them and as far as I know those expectations don't include them burning through tons of cash.

 

Indeed, I'm pretty sure that Ms aim at parity world wide with Sony for the most relevant part of this gen (ie before next systems ship) Natal being their joker.

 

The expectations are that MS will beat Sony at living room penetration. No one at MS would seriously expect the Xbox 360 to be a serious profit centre for them. I'm fairly certain they'd be more than happy with the Xbox 360 if it had no net profit/loss (broke even) over its lifetime, while beating Sony at being the living room computer.