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As long as it's cheaper than PS3, it'll be status quo

Even before the XBOX 360 launched last year, Microsoft openly stated that it planned to reduce the price of its newest console on a yearly basis. Now, a year later, some gamers are waiting for that forecasted price-cut, despite constant denials

Rumors of a price drop recently surfaced on the ‘Net, perhaps fueled by consumer expectations of a reaction to competition, and by a DigiTimes story claiming that a $100 drop would be possible. DigiTimes cites sources stating that Microsoft “has negotiated reduced production costs for the XBOX 360 with Taiwan-based manufacturing partners” and “total production cost can be reduced by 15-20% due to diminishing costs for most components along with increasing production scales and decreasing defect rates.” 

It’s no secret that Microsoft will be giving its chips a die-shrink from 90nm to 65nm to reduce costs and combat heat issues. The change in process, however, isn’t going to happen until 2007. 

In the end, it’s all up to Microsoft to decide cut-or-no-cut. At the recent X06 event in Spain, Microsoft’s Peter Moore responded to the question of pending price drops with a succinct “Certainly not.” Microsoft’s explanation is that it still believes that the XBOX 360 offers great value to the consumer, which likely means that it is perfectly happy to sit right between Wii and PlayStation 3. 

While the price of XBOX 360 may remain unchanged, bundling options are still wide-open. Some XBOX 360s currently come packed with a game and some Live goodies at no extra cost, and bundles could improve as the holiday season approaches. 

Some have speculated that, instead of a price drop, Microsoft will include the HD-DVD add-on in the XBOX 360 Premium bundle to match up with PlayStation 3’s Blu-ray ability. Seeing as how Microsoft says no to a $100 price drop, it seems unlikely that a $200 accessory be included for free. But if it were so, wouldn’t that really throw a wrench into Sony’s plans?

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