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Microsoft talks about reducing its costs, not ours

With the Xbox 360 having been on the market for over a year now, the rumors of an impending price cut have been constantly batted around. Microsoft even stated back in 2005 before the console first launched to expect yearly price cuts on the Xbox 360.

As certain factors started playing out in Microsoft's favor including the delay of the PlayStation 3 from spring 2006 to fall 2006 ( March 2007 for Europe) and the higher price tags of $499 and $599 respectively for the 20GB and 60GB PS3s, Microsoft backed off on talks of price cuts. When asked about an Xbox 360 price cut in early October, Peter Moore simply said "certainly not." A Microsoft spokesman followed up later in October by stating that there are "no plans to adjust the price of the Xbox 360 this year."

In a recent interview with A+E Interactive, Microsoft’s Robbie Bach is asked about the inevitable release of the next generation “Xbox 720.” Bach’s response was that the engineers are always working on the future products, but that cost reducing the Xbox 360 “seems to be the first order of business.” Lower overall component costs will likely come into play as the hardware used in the Xbox 360 ages along with a planned die shrink from 90nm currently used on the Xenon processor to a 65nm SOI process in 2007.

But while Microsoft is looking to reduce costs to improve the profitability of its Entertainment and Devices Division, it’s still unclear as to when customers will actually see any dramatic price cuts directly from Microsoft. Some vendors are taking matters into their own hands by offering special promotions or rebates with Xbox 360 systems, but Microsoft will likely let the PS3 dance around in the ring for a few rounds before it starts unloading with price cuts.



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REmodled premium
By BioRebel on 11/28/2006 9:30:49 AM , Rating: 2
I hope they rework the current premium, and perhaps add a larger HD and make the HD-DVD player, internal sometime soon. Im sure it wouldnt be hard to match the PS3's HD size with a cheaper price.




RE: REmodled premium
By ajfink on 11/28/2006 11:32:12 AM , Rating: 2
I'd say by late Q2 or early Q3 '07 we'll see a new model of 360, one that includes a larger hard drive, a built-in HD-DVD player, and HDMI support should be available for every system via a new cable. This would coincide with the shrink to 65nm for its CPU production. The GPU might also make a less noticeable process shrink.

But Microsoft will not lower prices until after this holiday season, because its only really competition is the Wii, and even then, the Wii often doesn't directly compete with the Xbox 360. The PS3 is sold out every and will remain sold out, while Xbox 360s and increasingly good games for it and the system and games are readily available for a lower price than the PS3.

Next Christmas will be the bloody shootout, not this one. That being said, sales potential will be lower for everyone, since the market will already be a bit saturated with their products.


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