Microsoft to drop Xbox 360 price by $100?
by Blake Snow 
{ Sep 29th 2006 at 5:25PM }
Rumor has it that Microsoft is planning to drop their Xbox 360 price by $100 through reduced part costs. On Wednesday, Taiwanese Digitimes reported, while naming no sources mind you: "[Microsoft] has negotiated reduced production costs for the Xbox 360 with Taiwan-based manufacturing partners, stated the sources. The manufacturers estimate that the 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, the sources pointed out."Though Microsoft Taiwan denied the rumor, the report suggests that the move is intended to equip the Xbox 360 premium sku with the external HD-DVD drive that costs $200. So in essence, this means the company would need to reduce the price of their premium console and their newly announced HD-DVD drive by $100 each. That ain't happening. Granted, the console is nearly a year-old, so while the possibility of reduced part costs is plausible, the possibility of a Microsoft price drop is another question altogether.
Still, a 360 price drop this year could put the damper royal on both Sony's and Nintendo's plans, however unlikely.
See also: Rumor: new, cheaper Xbox 360 this holiday
[Thanks, Jeremy; via Play Girlz]
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Reader Comments (Page 1 of 2)
Stewart Bananas @ Sep 29th 2006 5:51PM
I don't know about you but if I were microsoft I would definitely keep the 360 at the price it is now. I mean they ARE losing money off off each console so lowered production costs means they will either lose less or make a tiny profit, but either way, they want to reduce the loss. If they dropped the price they'd be losing more money a lot faster as more people would likely buy it at the lowered rate. It makes no sense to lose more money like that.
Crazylink @ Sep 29th 2006 5:32PM
$100 cheaper is good news to me, now that there's going to be a new Banjo game.
KBeat @ Sep 29th 2006 5:33PM
Peter Moore stated flatly at X06 that there would be no XBox 360 price drop this year.
LaughingTarget @ Sep 29th 2006 5:41PM
Microsoft currently has no need to drop the price of the unit. Without any significant quantities from either Sony or Nintendo to offer any actual competition, and the base-line sticker shock of the PS3 sending a few customers toward the 360, the price is in a perfect place. Comparatively cheap when stacked up against the PS3, and in plenty of quantity that anyone who wants one can get it.
When the PS3 starts reaching a point where it will have a shelf presence, the 360 will then likely see a significant price drop.
Gerwurztraminer @ Sep 29th 2006 5:39PM
An XBox 260? I'd definitely consider getting one if it were 100 less. So, see you in a couple years then.
Raynre @ Sep 29th 2006 5:38PM
Please God...
#2, Nintendo said that there would be no upgraded DSLite...
A week before it was revealed.
Brian @ Sep 29th 2006 5:39PM
No kidding KBeat. You never pre-announce a price drop, no one would buy at the current price.
leojsoap @ Sep 29th 2006 5:37PM
Considering I'm not hardcore enough come up with enough reasons to own more than one console per generation, $300 for a premium xbox is pretty tempting. I'm already set on a Wii, But… Assassin's Creed… and Halo…
But eh, considering that's not likely… Smash Bros… and Metroid…
shady @ Sep 29th 2006 5:37PM
reduction in cost != reduction in price. just an increase in the profit margin for MS
darryl @ Sep 29th 2006 5:41PM
They can drop it by $200 or more and still no one will buy it. It's destined for 3rd place. In Japan, they couldn't give these things away.
rockintom99 @ Sep 29th 2006 5:41PM
@KBeat: DS lite was also flatly denied, 3 days prior to announcement, wasn't it?
I would be very happy if this was true, as I have been looking into getting one lately, however, I doubt this is the case. If it is cheaper to make the console, I expect Microsoft would like to make a profit on it.
slestak @ Sep 29th 2006 5:43PM
Microsoft has no reason to drop their price. They're already lower than Sony, and they can't lower it enough to compete with Nintendo. They'd be crazy to drop the price on it now.
Rabidog @ Sep 29th 2006 5:40PM
This may be Sony/Nintendo public relations. They are trying to confuse the market into holding off on a 360 unit for the price decrease. Confusion allows enough time to potentially run the table during their respective launches.
IslandLife @ Sep 29th 2006 5:43PM
@KBeat
I highly doubt there will be a price drop but don't go by Peter Moore's or any other official's statement, because we all know that they'll never admit to a price drop. It makes no sense, economically speaking, since everyone would just wait for the price drop instead of buying one now. Seriously, think about it.
Solidus @ Sep 29th 2006 5:44PM
Why would Microsoft drop the price of the 360? Gamers that want the Xbox 360 graphics and games will pay the price for it when compared to the painfully expensive PS3. And, while I intend to enjoy the Wii60 combo platter, I still paid for 360 even though I knew the Wii would be cheaper.
And as previously stated, good old VP Moore stated there would be no price drop this fall.
KineticOnline @ Sep 29th 2006 5:43PM
Shady do you not mean a reduction in losses. Remember MS is making a loss on every console they sell.
swarmster @ Sep 29th 2006 5:43PM
"reduction in cost != reduction in price. just an increase in the profit margin for MS" -shady
Actually, it doesn't even mean that. It means Microsoft loses less on each Xbox. 15-20% cheaper to make still puts them in the red. Don't see why they'd set themselves back again by dropping the price. They're still cheaper than Sony.
nick @ Sep 29th 2006 5:44PM
Microsoft will NEVER admit to a price reduction until they're ready to announce such an option. Confirming a rumor BEFORE they announce it, would only kill existing sales.
A price reduction, at some point, is inevitable. It's going to happen.
When you think about it, it's the one area they can exploit, which Sony is unable to match. The cost of the PS3 is subsidized. For Sony to lower the price even more, means they'd incur greater losses in the short term.
I'be be shocked if Microsoft does not reduce the price of the 360 or include a better bundle in the next 3-6 months.
Ontario @ Sep 29th 2006 5:52PM
nick has written right. Microsoft won't hurt itself. So the time will show
shirizaki @ Sep 29th 2006 5:49PM
It makes no sense. I could see a surprise $50 drop or a prepackaged surprise for the holiday season, but lowering the cost 1 year after release for an add on makes no sense economically. It would be a bigger loss for MS.
So, in short, waiting won't kill you if you're wanting a price drop.
dish @ Sep 29th 2006 5:50PM
@ 9
got a case of fanboy denial?
KBeat @ Sep 29th 2006 5:58PM
To everyone calling me out on Peter Moore's comments, fair enough. I personally doubt we'll see a price drop, but it wouldn't shock me either. Regardless, I figured I better qft:
http://xbox360.ign.com/articles/736/736496p1.html
Tequilla @ Sep 29th 2006 6:04PM
I've seen this article passed around a lot lately and they keep claiming that Digitimes just realeased it. As much as I'd like to believe MS is going to lower the price of the 360, the article is dated from last July.
aZn_1080p @ Sep 29th 2006 6:08PM
M$ will have no choice but to drop price once PS3 comes out and the Playstation massive gets their hands on next generation gaming... right now there is about 100million Playstation fans waiting patiently for Sony's ultimate entertainment machine to drop, once they enter the picture M$ will be overwhelemed, even with their recent monopolizing tactics, so they will have to do whatever they can to stay above water.
Donal @ Sep 29th 2006 6:04PM
Does anyone know when the new chip is predicted to be released as I heard that less silicon on smaller chip meant smaller cost and therefore a price drop; I heard the drop wouldn't be until early '07, can anyone confirm?
MetaHuman @ Sep 29th 2006 6:06PM
Nintendo stated that there would be no next-gen DS upgrade. The hardware is fine as it is. The quote from Reggie is from one of the interviews that he even says it was mostly just cosmetic. He said the same exact thing about GB micro as well. The DSlite is not a true update, just like GameBoy Pocket, NES2, SNES2, and GBA SP were not true updates.
If this is true I'm suprised how fast they were able to bring the costs down. Good job MS for showing how much difference a year's head start can be (if true :P).
wasp @ Sep 29th 2006 6:10PM
$100 price drop not likely 25-50 maybe if ps3 was coming out at the same price pont MS wold under cut sony by $25-$50 but thay dont need to with being 100-200 cheeper then ps3 and MS does not see much of a threat from Wii so no need to try to under cut the Wii when wii being so under powerd
Ginzu @ Sep 29th 2006 6:25PM
One thing everyone seems to be forgetting is that MS is still subsidizing the hardware and making a loss on each unit, why one earth would they go and drop the price, so that they can loose even more $ on each unit sold????
Anonymouse Rep @ Sep 29th 2006 6:21PM
Okay, the actual Digitimes article is dated July of 2006.
It's now almost October. I'll say this again, since I've said it for almost a year, and some of you still won't believe me - even though it was told to me by a Microsoft corporate VP LAST year, and was reinforced THIS year by the same guy.
The Xbox 360 console was designed from the beginning so that the sales of the console itself would, in less than a year and if sale followed projections, be profitable. As of August, the console itself became profitable for Microsoft, albeit ONLY on the console. You do not, however, simply bank your profits - you channel them into accessories, such as the external HD-DVD player, the new guitar for GH2, the Live Vision camera, the racing wheel, and of course, into game development.
The net result is this - the console reached profitability already, due to the reduction in production costs that come with increased productivity. If you don't understand this, go through an auto factory sometime. The first car off the assembly line has the whole $5 billion price tag on it - the second is only worth a few cents. After you've made so many units, your labor force increases in efficiency and you've worked out the kinks in your supply chain as well, reducing your overall unit cost. It's simple business economics, really.
As for a price drop - why? Microsoft is in the perfect price point right now - the core system, at $50 more than Wii, HAS DVD playback built in, along with the potential for HD game play, and storage is the same. The premium system is still $100 / $200 less than PS3, which will make a HUGE difference for the GENERAL gaming audience this holiday season - especially since the sales people are already training up to sell the 360 that's IN stock versus the PS3 that may not be in stock until March or April.
Argue about that all you want - welcome to the reality of this holday season. Nintendo can have it's Wii share - this year belongs to Microsoft because Sony has given it to them.
Denney @ Sep 29th 2006 6:26PM
If this does happen I sony better have one heck of a launch lineup
Grok4Spock @ Sep 29th 2006 6:29PM
The "Xbox 360 is only $50 more than Wii" argument only works if people don't ever plan on saving their games, download content, or use Xbox Live in any way, shape, or form....
Waccoon @ Sep 29th 2006 6:40PM
I don't want a price cut. I want the new 65nm CPU that runs cooler.
The software selection is gettting very interesting. But, the thing still runs too damn hot.
joe smith @ Sep 29th 2006 6:41PM
There's a big difference between lowering costs and lowering prices. Unlike the Xbox, the 360 is built to get cheaper to manufacture over time. There's little reason to lower price this holiday with PS3 coming in as pricey as it is and even Wii coming in higher than expected. If they reduce costs without lowering price it means they come closer to break even on the hardware.
OS Perry @ Sep 29th 2006 6:49PM
I thought I recalled MS saying there would be a price reduction after a year.
My thought is that it very well could be cut in price around November, but they aren't wanting to announce it this early, because sales for October would dry up, and people would wait a month, to buy, and MS would loose a months worth of sales at the higher price. I know if I was wanting to buy a 360 at this point but it had just been officially announced a price drop would occur in November, I'd wait 30+ days.
Kuu2 @ Sep 29th 2006 6:58PM
So let me get this straight. You have a big show just this past week where the whole gaming industry is watching but don't announce anything there?
Yeah right. There will be no price drop this year, I repeat no price drop.
aka Bitter @ Sep 29th 2006 7:02PM
Grok4Spock: "The "Xbox 360 is only $50 more than Wii" argument only works if people don't ever plan on saving their games, download content, or use Xbox Live in any way, shape, or form...."
You forgot connect to the 'net wirelessly.
but conversely, the Wii is only $50 less than the core 360 as long as you never plan on: playing games in HD, streaming music or video, saving more than 512MB of content(minus the browser cache/system files), playing legacy games with the classic controller, downloading content, etc.
cuts both ways, doesn't it? ;)
Xbox 360 Fannnnatic @ Sep 29th 2006 7:04PM
The game system has already sold almost 7 million units worldwide.(6.1 Million according to Wikipedia). However that info old.
If they announce a price drop to combat Nintendo and Sony why would you consider the latter two?
I mean its all about games for me and the Xboz 360 has a helluva lot of them. Anyhow I respect anyone who buys a PS3 or a Wii as it is there choice and you cant take that away from them. Maybe they really like Sony's and Nintendo's games such as Zelda and Metal Gear.
However the Xbox 360 has so much to offer I would think that gamers that were hesistant before would run and pick them up.
Microsoft Public Relations Mystery Man @ Sep 29th 2006 7:24PM
eMagin has reportedly contracted with Microsoft to be working on a Z800 Visor customized for the Xbox 360 that is designed to work with Halo 3.
The Visor will feature fully Stereoscopic 3D and be available as a bundle with Halo 3.
Reported cost is $249.00.
The Z800 currently retails for $549.00 and is going under serious refinement to get it within the target price range.
This will be the first time a game on the caliber of Halo will be compatible with the Z800 visor. Furthermore this will be the first mass produced color Stereoscopic 3D visor to be released for a home console system.
This information was released at X06 and is the sole reason why Halo 3 was not shown. The game will hava capabilities to display on both High Definition TV in 1080P,720P,480P, and on a to be announced resolution in Stereoscopic 3D using eMagin.com's visor.
The Visor will be based off of the Z800 and will feature significant modifications.
Christoph @ Sep 29th 2006 7:20PM
How would a lower production cost but unchanged sales price affect the extremely logical, well thought out, supremely intelligent Joystiq opinion of "loss is the new profit"?
Microsoft Public Relations Mystery Man @ Sep 29th 2006 7:24PM
Hidden Riddle:
The information that was released at X06 was leaked however to solve the riddle to find the memo you must go to this site.
www.
What is higher than everest lower than Marina Trench and has the wings of yesteryear on top of the Redwood Tree
com
Solve the Riddle find the site and get the information you seek.
NorCal05 @ Sep 29th 2006 7:27PM
Wow look at all the stuff MS is coming out with. HD-DVD drive, better chip manufacturing process, Vision camera, Guitar Hero game, Live Anywhere, wireless headset, tons of downloadable content, etc, etc. Now how difficult is it to come out with a FRIKKIN LARGER HARD DRIVE
Guru G @ Sep 29th 2006 7:33PM
Some one plz tell me how the hell is the xbox360 cheaper
20gb 360 = 400
wifi = 100
hd-dvd = 200
total = 700
60gb ps3 + blu ray + wifi = 600
?????
SquirrelPhister @ Sep 29th 2006 8:45PM
42. Guru G:
Some one plz tell me how the hell is the xbox360 cheaper
20gb 360 = 400
wifi = 100
hd-dvd = 200
total = 700
60gb ps3 + blu ray + wifi = 600
?????"
because you only need to spend $400 (or $340 if you get the core system with a memory card) to get an equal or better (rumble) gameplay experience
but you already knew that. you just wanted some attention. damn, i totally fell into your clever clever trap
John Porcaro @ Sep 29th 2006 8:07PM
NO PRICE DROP COMING THIS HOLIDAY (or anytime in the foreseeable future). This article was written in July, and we (Microsoft) have flatly denied the rumors at least twice since. Make this three times.
daver @ Sep 29th 2006 8:10PM
360 this week is
447 CAD bundled with
PGR3
and NHL2k7
It is already price dropped ;)
DocEvil @ Sep 29th 2006 8:12PM
Come on guys, MS dropped the price on the original Xbox by $100 after only 6 months on the market and it was only $299 at launch (i.e. 33% reduction)
Dropping the 360 price by $100 (25% reduction) after a year isn't possible, it is immenent. The strategic value of a price drop this Christmas is overwhelming.
Btw, in the last interview I saw, Moore didn't say no price drop this fall, he said that they were not staging a price drop at X06 and that there were no plans to drop the price AT THIS TIME. That comment is very different from 'no price drip this fall'.
Andre @ Sep 29th 2006 8:18PM
XBOX 360 has an superior Operating System but looks not so nice compared to the PS3.... i'd say get them both ;) or just the XBOX
Piazza @ Sep 29th 2006 8:28PM
I saw today that you can get the Xbox 360 Premium System, two wireless controllers, plug and play unit(recharger) and Project Gotham Racing for a bundle of only $450.00 at Costco.
That is a pretty damn sweet bundle.
Tom @ Sep 29th 2006 8:38PM
To Darryl and Azn 1080p,
My favorite sony fanboys, when will you give up? I've been on this blog for a few months and I always see you two clowns on every 360 post with some negative comment. You've probably used all your email accounts by now since I'm sure Joystiq has blocked you many times. You want your 600 dollar videogame supercomputer, fine, take it. I am happy with my 360 and with the nice list of games coming I have no worries I wont see MGS 4 or DMC 4 or some other Japan made sequel that Sony relies on. If anyone is trying to stay above water its Sony.
Beeebop @ Sep 29th 2006 8:53PM
I think, if the 360's cost of production drops $100, it would make more sense for MS to bundle a premium 360 + the HDDVD drive for $500. That way, even if HD movie playback is an important decision for gamers, they have that area covered as well at the same price as Sony's cheap SKU.
It wouldn't make sense for them to drop the price of the premium just yet... except maybe in Japan with Blue Dragon bundled with it...