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Xbox 360 Arcade Price Drop  (Source: VGChartz)
Microsoft price drop will make Xbox 360 Arcade cheapest next-gen console

The console wars are raging now as the PS3, Wii, and Xbox 360 fight for top spot in market share. One of the reasons the Nintendo Wii is so popular is its price tag. The Wii is currently the lowest cost next generation console available.

According to VGChartz, the Wii may not be the lowest priced console for long. According to an image acquired by VGChartz, the Xbox 360 Arcade console will get a price cut to $199.99 on September 7, 2008. The price cut would come only a few months after the 20GB Xbox 360 received a price cut to $299.99 and the 60GB Xbox 360 was announced.

Microsoft has said in the past that it knows the sweet spot for console sales is $199.99. VGChartz reports that when Microsoft dropped the price of the Xbox 360 in Europe to 199 Euro in February of this year, the console sold at significantly higher volumes than before the price cut was put into effect. VGChartz reports that it’s tracking information shows that the Xbox 360 sold 100% more units in the 6 months after the price cut than before.

The low price leaves many wondering if Microsoft can actually be profitable at a $199.99 price point. At launch the Xbox 360 cost about $525 to build and by November of 2006 the price according to iSuppli to build the Xbox 360 was about 40% less.

DailyTech reported in September 2007 that the Falcon CPU revision in the Xbox 360 made the CPU about 50% less to build. In May, DailyTech reported that the Jasper update would be on the market in August, which would coincide with a significant price drop for the Xbox 360 in early September. The cost to build the Xbox 360 Arcade could be reasonably expected to drop again with the Jasper update.

In short, Microsoft could well be profitable at the new $199.99 price point for the Xbox 360 Arcade. However, when first launched Microsoft was more than willing to take a loss on the console to get them into homes. Microsoft could be doing the same thing with the Arcade and selling it as a loss leader to increase its market share.

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RE: Wow
By mcturkey on 8/4/2008 5:14:07 PM , Rating: 2
The 20GB model is gone. They pulled a Sony when they cut the price to $299 to clear out inventory and discontinued it, quietly, replacing it with the 60GB at the old $349 price. This isn't entirely a bad thing, mind you, but definitely not what a lot of people expected. If this supposed price cut to $199 for the arcade (and hopefully $299 for the 60GB) doesn't happen, Microsoft is going to have a disappointing holiday selling season without a blowout title like Halo 3 to really move the metal.

RE: Wow
By sweetsauce on 8/4/2008 5:43:59 PM , Rating: 2
If only a game like Gears of War 2 were coming out...wait a minute!!!

RE: Wow
By larson0699 on 8/4/2008 8:41:02 PM , Rating: 2
To hell with GoW2...

Duke Nukem Forever baby!

RE: Wow
By mcturkey on 8/4/2008 8:56:34 PM , Rating: 2
Gears of War 2 will not move systems in the way that Halo 3 did. Yes, it will be big, but it will not sell a million+ systems by itself.

RE: Wow
By therealnickdanger on 8/5/2008 9:05:27 AM , Rating: 2
At this point of saturation (~20 million units), it's really hard to sell systems based purely on one title anyway. GOW2 will move systems, Fable2 will move systems, Madden will move systems... even Netflix will move systems. When Halo 3 came out, the Halo 2 people were still sitting on the sidelines. The same could be said about MGS4. At those moments in time, both titles prompted the remaining diehards to enter the next generation.

"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins

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