Xbox 360 price drops by $50

[Zaphod]

Rather than have a SKU available at $250, with a strong value, to propel christmas sales. They've opted to make the core an even worse value, making the only reasonable entry point $350, a full $100 higher than what it could potentially be.

All I can do is laugh at this point, MS is basically teaching "How to Blow a Golden Opportunity - 101"

I disagree. An effort to make the core more attractive now @ $250 wouldn't attract that many new customers and might steer the ones that can be seduced @ $350 towards the lower margin Core rather than the Premium. At the moment, I believe MS is confident to grow their market share slowly building on Live and downloadable content with the Premium SKU providing a 'value for money'-proposition compared to the PS3.

IMO, they won't be giving the Core any legs until they think it will be able to target larger groups of consumers that are not currently attracted to the Premium. Probably at the 'magic' $199. If they want to push some numbers, I believe we might see (MS backed) 'specials' at that price come this Christmas, but that it won't officially drop that low until around this time next year.

 

[Todd33]

I suspect the new prices make the Elite, Halo and Core much higher margin than the Premium, thus they are driving sales towards the Premium and the others in effect subsidize the larger $50 cut.

My question is are they going to a single motherboard with HDMI? If so, they will have to kill the old SKUs off at some point and flush the system. Maybe this will be after the holidays and coincide with the 65nm revisions.

 

[Zassk]

I thought this information might be relevant to the discussion. On the xbox.com forum, a poster named MRCUR claims to know how to identify a 65-nm console, and when they started appearing. According to him, the Microsoft service center has already started sending out 65-nm consoles when the customer requires a replacement; suppliers have also started receiving them, but they haven't yet reached store shelves. Take this with a grain of salt.

Yes, all July consoles are "Falcon" systems.

0728 is the first lot number of Elites that will have the new 65nm chips!

You want 0724 or higher (for new heatsink, no 65nm) or 0728 or higher for new heatsink and 65nm.

I really doubt any stores have July consoles yet. I'm sure suppliers do, but I don't believe they would have left them yet.

From what I have seen very recently, MS is now sending out July 2007 consoles from the service center. So yes, by the time your console breaks you should be seeing ALL 65nm consoles leaving the service center.

Source:
http://forums.xbox.com/16/14229273/ShowPost.aspx#14229273

 

[Carl B]

I suspect the new prices make the Elite, Halo and Core much higher margin than the Premium, thus they are driving sales towards the Premium and the others in effect subsidize the larger $50 cut.

Wrong way of looking at it. I think in very real terms, the margins on the console go in this order: core, premium, elite/halo. The margin on the premium has been reduced the most relative to the others, but it's definitely still higher than the core in terms of its immediate benefits to MS.

 

[scooby_dooby]

1) MS isn't offering another price cut before the Holiday
2) The $50 price drop is ineffective and doesn't spur sales equal/greater than the Wii
3) The 2007 lineup (including Halo launch) is ineffective and doesn't spur sales equal/greater than the Wii
4) All future revisions of the 360 will include HDMI (meaning the current stock lacks value)

1) MS isn't offering another price cut before the Holiday
- This is the only one that matters. If they do make another cut, then this whole thing makes alot more sense.

As for the rest, the only assumption I'm making is that a $300 console would sell much better than one at $350.

And, this will be MS's last Holiday where they will have a such large potential pricegap between the 360 and PS3, so they should probably take advantage of that opportunity.

I feel they've already blown much of the opportunity over the last year, as show nby the fact they are missing their own sales targets, and have seen sales steadily decline in year 2, when most consoles increase sales in year 2. It's clear that MS could be in a much stronger position than they are right now, if they had've made some more aggressive moves.

This is really the last chance to get it right, and with this new price it seems they won't (barring another pricedrop this fall).

Don't mis-interpret that to say that they won't have a great Holiday 2007, they will. It just won't be dominant. And they are leaving open a very large opportunity for their competitors in 2008.

 

[Todd33]

Wrong way of looking at it. I think in very real terms, the margins on the console go in this order: core, premium, elite/halo. The margin on the premium has been reduced the most relative to the others, but it's definitely still higher than the core in terms of its immediate benefits to MS.

So the smaller price drop on the core was to drive sales up to the premium as to minimize loss or maximize profit? Makes sense.

 

[Zaphod]

My question is are they going to a single motherboard with HDMI? If so, they will have to kill the old SKUs off at some point and flush the system. Maybe this will be after the holidays and coincide with the 65nm revisions.

Personally I think that, if they're going to a single motherboard, they'll just silently start dropping them in there, and at some point transition to shipping every unit with HDMI. They don't need to change SKUs to modify what's inside the box inside the box. Doing it that way might even spur some sales when we get the inevitable "OMG!!! I just bought a Xbox 360 Premium, and it has HDMI!!!" forum posts. If they time it right, I don't think the desire for HDMI among the general populace is so big that they risk orphaning any significant number of units on store shelves, even if some will go barcode-hunting to make sure they get the HDMI-enabled unit they want.

 

[Todd33]

Personally I think that, if they're going to a single motherboard, they'll just silently start dropping them in there, and at some point transition to shipping every unit with HDMI. They don't need to change SKUs to modify what's inside the box inside the box. Doing it that way might even spur some sales when we get the inevitable "OMG!!! I just bought a Xbox 360 Premium, and it has HDMI!!!" forum posts. If they time it right, I don't think the desire for HDMI among the general populace is so big that they risk orphaning any significant number of units on store shelves, even if some will go barcode-hunting to make sure they get the HDMI-enabled unit they want.

I think legally they have to change the SKU if they change features. If you need a HDMI model are you to play roulette and keep buying a 360 premium until you get a new one?

 

[scooby_dooby]

I think legally they have to change the SKU if they change features. If you need a HDMI model are you to play roulette and keep buying a 360 premium until you get a new one?

Well it would certainly be listed on the box as a feature.

 

[Carl B]

Personally I think that, if they're going to a single motherboard, they'll just silently start dropping them in there, and at some point transition to shipping every unit with HDMI. They don't need to change SKUs to modify what's inside the box inside the box. Doing it that way might even spur some sales when we get the inevitable "OMG!!! I just bought a Xbox 360 Premium, and it has HDMI!!!" forum posts. If they time it right, I don't think the desire for HDMI among the general populace is so big that they risk orphaning any significant number of units on store shelves, even if some will go barcode-hunting to make sure they get the HDMI-enabled unit they want.

This is quite plausible, but ultimately it's all a matter of how many 90nm chips/consoles they have lying around. Clearly moving forward, new builds are going to focus on 65nm, and this would be a good way of working a 'mixed' channel during a transitional phase. Ultimately however, MS needs to time the transition from a set of consoles with a certain feature-set to another with the HDMI included; *that* transition will not be as seamless, even if the physical hardware itself would have been identical for some time.

I thought this information might be relevant to the discussion. On the xbox.com forum, a poster named MRCUR claims to know how to identify a 65-nm console, and when they started appearing. According to him, the Microsoft service center has already started sending out 65-nm consoles when the customer requires a replacement; suppliers have also started receiving them, but they haven't yet reached store shelves. Take this with a grain of salt.

Well I am certainly taking it with salt, but it would very much validate Dave's "gradual" view of what's at play. Frankly it's easy to know/solve though - has anyone busted one of these supposed 65nm consoles open yet? We'd be able to tell what's going on in short order.

 

[Zaphod]

I think legally they have to change the SKU if they change features. If you need a HDMI model are you to play roulette and keep buying a 360 premium until you get a new one?

Why not? Unless MS si claiming that "the Xbox 360 Premium has HDMI", I dont se how anyone could have an avenue for complaint. When they're confident that most of the old stock is cleared from the channel (so not to orphan it on store shelves, even those who don't really care would probably pick the 'officially' better equipped one) they'll announce properly, put it on the box, and start listing it as a feature.

Ultimately however, MS needs to time the transition from a set of consoles with a certain feature-set to another with the HDMI included; *that* transition will not be as seamless, even if the physical hardware itself would have been identical for some time.

Yes. With the right timing, though, I don't think the timespan from the moment the first HDMI equipped console is found in the wild to the point where all Xbox 360 now officially has HDMI needs to be all that long. A couple of weeks? It would all depend on how much mixed stock is going to be out there. Anyway, it's all speculation at this point.

 

[AlphaWolf]

I think legally they have to change the SKU if they change features. If you need a HDMI model are you to play roulette and keep buying a 360 premium until you get a new one?

If you need a HDMI model you should buy an SKU that advertises that as a feature, ie the elite. Legally I'm pretty sure their only responsibility is to ensure that all of the features advertised are present. Obviously they'd be creating problems for themselves with consumers if they started putting out a certain amount of HDMI enabled boxes mixed with a number those without, but I don't think it has legal ramifications unless they are trying to sell them all as HDMI.

Well it would certainly be listed on the box as a feature.

Only if they choose to enable it and advertise it. They could very well make a change to include HDMI on the MB and not even connect it, although unlikely I wouldn't rule out something like that happening during a transition.

 

[Dave Baumann]

Only if they choose to enable it and advertise it. They could very well make a change to include HDMI on the MB and not even connect it, although unlikely I wouldn't rule out something like that happening during a transition.

Well, it could even be as simple as blanking it by the case molding (should the choose note to ship it).

 

[RancidLunchmeat]

Does MS have to beat the Wii in order for the price cut to be effective???

Certainly not.

My post was prefaced by mentioning the sentiment displayed in this thread, which seems to be different than reality.

 

[RancidLunchmeat]

I think you're confused as to the nature of this side conversation; the future availability of HDMI has nothing to do with "value" in the console - the conversation rather centers on what Microsoft's position is in relation to the retail channel moving forward... if this is indeed the case in terms of feature-shift across all present pricepoints. Dave's saying that there may be 65nm chips shipped in the present 360 configs that would allow for a cost buffer moving towards fuller revisions, and I'm just defaulting to a line of thinking that says 65nm chips will come with the new motherboards and not before.

I disagree, I'm just carrying the point to its natural conclusion. If HDMI is included in all Falcons, then MS must change the sku and/or advertise the additional feature. This separates them from the current stock and is theorized has an impact on their current price strategy.

If HDMI is not included on every falcon, then they can simply be intermingled with the existing stock and the average consumer wouldn't know the difference. That would mean their existence wouldn't impact any pricing strategy.

 

[expletive]

It doesnt seem likely that they would go to 65nm without HDMI does it? Why have an additional board redsign if it isnt necessary? My thought is that they would go straight to 65nm/HDMI rather than stagger the deployment.

 

[RancidLunchmeat]

Why would they include HDMI on the Cores/Premiums at all?

Sure, the motherboard would allow for it, but they just leave it off.

Why is it assumed that moving to 65nm means that all 360s are equipped with HDMI?

Is the entire basis of this rumor the Halo edition? That's when it all started, wasn't it? When we got a premium/Elite hybrid?

Which is really only a hybrid because of the smaller HDD.

If the Halo edition didn't exist, would this rumor of all HDMI even exist?

 

[Carl B]

Why would they include HDMI on the Cores/Premiums at all?

Because HDMI is becoming increasingly important in the display-space, and at a nominal cost of inclusion, why wouldn't they throw it in?

Sure, the motherboard would allow for it, but they just leave it off.

Why is it assumed that moving to 65nm means that all 360s are equipped with HDMI?

Is the entire basis of this rumor the Halo edition? That's when it all started, wasn't it? When we got a premium/Elite hybrid?

Which is really only a hybrid because of the smaller HDD.

If the Halo edition didn't exist, would this rumor of all HDMI even exist?

As for the rest, the Halo edition may be the basis for a lot of folks speculation, but not everyone's. There was information to this effect floating around before the "green" edition was ever revealed.

For myself I'll put it like this: if MS in fact does not move to a universal HDMI strategy come the full roll-out of Falcon, I'll be a little surprised and bewildered. I think it's a touchy game to differentiate across SKUs in such a fundamental way as I/O - right now the 'Elite' gets away with it because it's elite. If two years from now we still have some 360's with HDMI and some without, well nothing good or bad, but again I'll be surprised.

 

[Tap In]

...
For myself I'll put it like this: if MS in fact does not move to a universal HDMI strategy come the full roll-out of Falcon, I'll be a little surprised and bewildered. I think it's a touchy game to differentiate across SKUs in such a fundamental way as I/O - right now the 'Elite' gets away with it because it's elite. If two years from now we still have some 360's with HDMI and some without, well nothing good or bad, but again I'll be surprised.

agreed.

they have the tech on the MB now. Silly to not just use it and keep it equivalent across all skus and maybe the Elite just becomes a larger HDD in black at a lower price differential?

 

[Dave Baumann]

In a spot of good timing, ARS have a rumourville article about HDMI recently posted:

According to my source, Microsoft wants to cut through all their existing inventory of hardware. They will then quietly "soft launch" a new version of the Core and Premium hardware in late August or September that will include an HDMI port. It's also expected that this new hardware will feature the 65nm process for the CPU and quieter DVD drives. The new hardware will ship in boxes very similar to what we saw on store shelves now, but there will be a small "call out" on the box so you know you're getting a system with the HDMI connection.