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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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RE: Bach -we dont buy your story
By Drexial on 11/28/2006 2:59:00 PM , Rating: 2
cost of the console to a retailer is $15 less then the MSRP. the reason they didnt drop the price of the console like previously planned is because the PS3 became less of a competitor then previously planned. the 360 is on edge of becoming profitable. but that doesnt mean anything. they never plan on making money on the consoles, they plan on making money on games. the more consoles out there the more games being sold. but what microsoft didnt plan on is the success of the Wii, but then again nobody did. the Wii is filling in the gap with the lack of PS3s more then the 360, which is exactly why microsoft should plan on a price drop soon. id say $100 by next december if they are going to maintain sales. i can promise that the Wii will be down $50 by next year and they will feature the Wii with the DVD player at the retail price of the current model. the fact that the Wii is $50 more then any other release from Nintendo and they are making money on each console sold. this is exactly why Nintendo has won this round. they played the perfect game of catchup from the 360 being released a year previous. though i still believe the PS3 will regain strength once they iron out the issues of releasing a product before its ready, they really did make too many last minute decisions.

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