I would argue with your assertion that Microsoft "needs" a price reduction. As an objective observer and owner of all three consoles, I think it's safe to say that the Xbox 360 is the better console at the moment for prospective new console buyers due to the game library alone. It's selling like hotcakes and its competition (PS3) is in a bit of a rough patch right now.

Next holiday season, when PS3 starts to pick up steam, is when they should and probably will drop their prices. There's no reason to right now.

Just drop the price now. Microsoft hasn't really made much of a concern about XBox console profitability, so why not now?

If they drop the price too fast after christmas some people will be upset they just overpaid. Plus if they drop now it will jump start sales but by christmas that will fade off again. The best time to drop is september-november to get momentum going into christmas 2007

Microsoft needs a redesign and pronto. Its poor reliability and fan/drive noise are the main reasons it's not selling well.

#4, get real man. I'm not disagreeing with you that those are issues that need to be worked out, but that they are the main reason its not selling well? You think Joe Schmo knows anything about how loud it is or even cares? Stop talking out your ass.

"Its poor reliability and fan/drive noise are the main reasons it's not selling well."

You pulled that out of your ass. Only a tiny minority of people know about the launch hardware woes and the noise of the fan. That is not scarring off new customers, 90% of which are "casual gamers".

Honestly, I was hoping for the lower die size, that'll sell me the 360 next year, that and the noise. My PC is annoying enough for me and it's been driving me nuts.

I want to buy a 360 but right now it's too much money. I already bought my Wii and 4 controllers... a lot of money. I don't want to spend so much on a 360, and I have to get the Premium because I need the hard drive. And the drive is $100 if I get the Core, plus I'd need to get a wireless controller.

Right now I only really play Halo 2 for Xbox... the only game that really strikes me that I've played for 360 is GoW... maybe Saint's Row, and maybe Dead Rising.

I got 120$$ in Best Buy cards, so I will put those toward the purchase. I just want a smaller price drop. Gamestop had a used Core for $270.

I don't think a die shrink is necessary for a reduction in price. It will certainly help but the 360 is already selling at an ~$75 profit (according to a previous post on this blog). Manufacturing costs will continue to be reduced.

The question is - at what point will the costs be reduced enough for MS to justify to themselves a price drop on the 360?

Don't expect a price drop anytime soon. They may be making a "profit" per console sold at the moment, but remember that the Xbox division at Microsoft is still billions in the red.

It's only a year into the 360's life cycle, so it's still too early for a cut anyway. Certainly, more costs need to be cut first. When install base growth begins to stall, then maybe MSFT will consider a price cut. Also, with PS3 and Wii scarcity projected to endure into early/mid 2007, the 360 still has the availability advantage.

It's fairly priced at the moment, and I'd love to see a price cut myself. I'll hope for one, but definitely will not expect one within the first 3 quarters of 2007.

#9

The 360 is not, repeat not, selling for a $75 profit. People have endlessly misinterpreted that report. The cost estimate, not Microsoft's numbers but an estimate from an outside company making a highly educated guess, only applied to the essential hardware. That didn't include the controller, cables, printed material, packaging, and numerous other cost items before the machine reaches the retail shelf.

Their cost merely brings the Xbox 360 within the realm of break even rather than losing money per unit. which is an important achievement but not one they'd want to squander on a price cut that would again incur debt per unit, unless sales were going through the floor.

This article you link to isn't very well sourced. The information is attributed to unnamed "industry sources" and there's no comment from Microsoft or the CPU manufacturer. While it may be true, this is the kind of iffy, shoddy reporting that got us into the war in Iraq. Without good sourcing, this is basically a glorified rumor, but your post seems to just state it as fact.

Does the average consumer really consider fan noise an issue? And what is this with reliability? I haven't heard anything about the recent 360s showing the ring o' death. I have one and it works spot-on and I'm extremely pleased with it. I have a Wii, too, and I'm enoying it as well.

Just like many consumers...I'm buying systems because of games...not specs, or rumors, or any of the other white noise out there.

I'm amazed no ones piped up about this yet: The CPU heatsink fan is not the thing that's making all that noise. The heatsink fan is quite quiet. The thing that's really noisy is the DVD drive when it spins up. It's so loud that I ditched the "Arcade Unplugged" game that came with my bundle and just rebought all of the games off of live so I could play it off of my HDD and not hear the DVD drive.

The SpikeTV Videogame Awards show featured a skit where a someone complained about their neighbour's kid making too much noise. In the end they had like a wind-turbine sound in his living room, and when he turned off his 360 it was quiet. That was worth a "heh" at least (the rest of the show was crap ofcourse).

Then again, if you can afford a premium 360, XBL gold, GoW and a nice big HDTV, then you can probably afford a sound set that goes louder than the fan? And what do you call a fan fanboy anyway?

The 360 is loud, hot, and unreliable in the eyes of consumers. The number of horror stories with consoles breaking down after installing required updates and dealing with frightening customer service have tainted its image significantly. When a nearly 7-year-old console like the PS2 is outselling the 360 by a ratio of 2:1 for an entire year, there's a lot for Microsoft to be worried about. The Wii has already sold nearly 2 million units, and the PS3 (despite insane production slowdowns) is managing to hit a million units by the end of this year. And it's only in two territories.

Microsoft had a one year headstart and a global launch, yet their most popular territory (North America) has only purchased 4 million units over the course of 13 months. Once Nintendo and Sony jack up production speed, there's no telling how fast they'll overtake Microsoft's lead.

Nintendo's offering promising '07 titles like Mario Galaxy and Smash Bros, while Sony's got everything from Heavenly Sword and Motorstorm to Metal Gear Solid and Killzone. MS is definitely in the fight of their lives.

The 360 is well overdue for a price drop. The DS has already dropped in price AND even got a redesign. I'm definitely waiting for a price drop. If MS doesn't release a repriced/redesigned box in 2007, I'll probably just skip it and get a PS3.

(Someone that got burned by XBOX1 disk read errors. Not excited to spend more money on another brick.)

#17 So if Xbox 360 doesn't get a price drop, you're going to go for a $200 more expensive system? Good reasoning.

i can't hear any fan noise over my digital surround sound. come to think of it i couldn't hear any fan noise over the old setup i had eithier. fan noise doesn't bother me anyway i'm not an anal OCD type. i can deal with the machine running and fans keeping the console /computer cool.

**4. Microsoft needs a redesign and pronto. Its poor reliability and fan/drive noise are the main reasons it's not selling well.**

I bought a Premium 360 1 wk before the Wii launch.
No problems whatsoever with reliability, heat, fan or drive noise.
For one, they upped the warranty to 1 yr. Considering that they've been more reliable at replacing malfunctioning consoles than Sony ever will be, that's peace of mind. Another thing - if you actually hear fan or drive noise over your speakers then you need to upgrade your audio system and/or tv. I don't hear my fan/drive because my system is cranked up when I play games and 99.9% of people are the same way. (Unless of course my 2 y/o daughter is sleeping. But I still don't think the fan/drive noise is loud.)

The systems only about a year old. Like someone stated, its a bad time to do price drops right after the holiday season. Hopefully they will match the price drop with the smaller die + Halo 3 to get the momentum rolling for '07.

lol 17 g0t pwned by eighteen.

I thought I read somewhere that Microsoft is making a small profit off the consoles now after having reduced some costs in certain components, so they already have some wiggle room should they want to reduce the price. But why now? It's currently selling well. You should only drop the price once sales drop off.

Instead, I think incentives are a better idea from a business point of view. Either instant money off, mail in rebates, credit towards another purchase, or pack-ins.

I think a price reduction is likely before next Christmas though. Where there SHOULD reduce the price immediately is Japan. It probably wouldn't have a huge effect, but it certainly couldn't hurt.

nick, the XBOX 360 already has a much lower price in Japan. Weren't the Blue Dragon bundles sold for $380 US?

18....... i was thinking the same thing....not to mention s Ps3 and its many problem (disconnecting controller is MUCH WORSE THAN ANY FAN NOISE IVE EVER HEARD) Wii is selling because its "intriguing" but when people want more thats gonna be a novelty....so thats out. And what console you know that had a price drop in a year.....this is the dumbest ranting ive ever heard....Ive been hearing this for months....and it screws my head up that people got this dumb idea that they pulled out of the air.........Its not doing bad enough to warrant a price drop hell the HD-dvd sells out so i would imagine it isnt doing to bad.

How about a price drop on the original xbox? Or a psone-style redesign? I'd be much more interested in something like that.

I can't hear it anymore: How many defective X360 are really out there.

I bought mine at launch (Europe) in 2005 and except for 2 freezes nothing happend with my X360. Even if I play for 6 hours straight NEITHER the "brick" nor the console itself get hot.

The only thing I really dislike is the noise that the drive makes - that's a major turnoff for me personally.

#18 - If 360 doesn't get a price drop, I'll will spend $200 more for a 60gb hard drive, HDMI, and Hi-Def player. (How much is that 360 add-on again?)

I'm not really trying to slam MS here. But if in 8 months my choices are a 2 year old console at $400 and a 1 yead old console at $600, I'll go with the $600.

Again, my XBox1 is a worthless brick. My original PS2 is still going strong.

Okay, so I got a 360 for Chirstmas. It bricked this morning, so I exchanged it for another one that is having graphics problems. So I need to exchange it again. How do I get my game data off the hard drive without buying a memory card? I've googled it and checked cNet, here and Engadget and can't find anything about this. ):

#13 see, there's these, we'll call them "people," that think something they say is important enough to speak for the masses, like #4. i have had my 360 for almost a year (manufactured in 12/05) and fan noise? never notice anything. heat? i can play for 5 hours straight and it's perfectly fine.

those "people" that i speak of, like #4, i think i'll rename them as trolls. yes, that's a good name.

I don't quite know what to think of the 65nm thing. It's surprising I guess.

Now that means to me that 360 won't be gaining HDMI until at least the middle of the year. Hmm. I can't see how that's a good thing for MS.

they really don't 'need' a price reduction right now, sales are doing just fine. plus the fact that Microsoft is willing to bleed money if it means it will give them the lead in console sales.

my guess is that we'll see the price drop either right before the european PS3 launch 'sometime in march' or in October or November. but certainly before thanksgiving next year.

and to anyone that thinks a smaller die equals less noise, you should know that the fans don't make that much noise. the infamous noisiness of the 360 is from the DVD drive, not the fans, so a die shrink won't affect how loud it is.

I think that the reason they are being held up is due to the massive recall (or whatever you want to call it) of the 360's with the 3 red lights.

Those who are sending units in for repair might say; I want the new unit instead of a refurbished/repaired older model leaving them with a tiny supply of the new units to be sold.

They may wait until the dust settles or the issue with the three red lights has been brought under control.

@DM
i'm not going to waste time debunking your bullshit since anyone who would be reading these comments knows you have no idea what you're talking about, I just wanted to congratulate you for winning the Dumbest Motherfucker On The Internet award

i know there was a lot of competition for that one

"I would argue with your assertion that Microsoft "needs" a price reduction."

Well, they need something, because Gears of War ain't cutting it. It sold a ton of copies but didn't make the consoles fly off the shelves. A price drop would have helped them if for no other reason than they could have said you can buy a 360 for the same price (or less) than a Wii.

The 360 isn't turning the profit some people seem to think it is from that site that added up the total cost of the parts. That's just the part cost, not the cost it takes to actually get it off on the shelf. It could be turning a small profit now, but highly unlikely it's the 60-75 bucks I've been seeing people parrot.

A few bullet-points:

- No need for a price drop. The 360 is selling OK, has a great library, and a new warranty addressing anyone's concerns about reliability they've heard about. It's priced between it's two competitors and is the better value than the PS3 to a potential customer right now.

- The 360 is not making money for Microsoft. The Xbox/Entertainment Division are billions in the hole and there is a long way to go to profitability. Get your head around the fact that even $75 (your 'profit' estimate) times a healthy amount of consoles sold, let's say 22 million (the amount of PS2s generally considered sold) is still 'only' 1.65 BILLION dollars, still less than HALF of what the XBox has cost Microsoft ($4 Billion).

- Don't confuse the phrase 'HD-DVD drive is SOOO popular it's selling out everywhere' with the phrase 'the first small shipments of the HD-DVD drive have sold out.' The next shipments will likley be in stock on shelves, like the 360 is now. Early-adoptors will always force a scarcity, like the PS3 and Wiis have right now. Manufacturing will catch up with demand.

- The 360 is noisy. Having a surround-sound system turned louder than the noise of the 360 does not make the 360 quieter.

Erin, keep your hard drive when you exchange your system if you have to do that.

Best route to go.

Give us video games that show the power of the xbox 360 not smaller cheaper machines.
Microsoft Gaming show your stuff !!!

I don't know about you guys, but my 360 never heats up and is as quiet as my chloroformed girlfriend. Perhaps it's cause I bought mine last month?

to #28...
remove your hard drive, and swap it with the new consoles.

Alex...wow. So uninformed, it's pretty scary...

I encourage all of you who think MS is in the "fight for their lives" to go on over to xbox360.ign.com and look at all of the titles they have coming out in 2007. Then, come back to this comment board and re-read what you wrote. HAHAHAHAHA!!!!!

Halo 3
Bioshock
Mass Effect
Assassin's Creed
Lost Planet: Extreme Condition
Crackdown
Alan Wake
Forza Motorsport 2
Half-Life 2
Too Human
Ghost Recon: Advanced Warfighter 2
Grand Theft Auto IV
Huxley
Army Of Two

It's gonna be a great year to be a gamer...

17. JD:
"The 360 is well overdue for a price drop."

name one successful console that dropped the price within a year of its debut (and the 3D0 doesn't qualify as 'successful')

30. Steve2:
"Now that means to me that 360 won't be gaining HDMI until at least the middle of the year."

how do you figure that? they could release an HDMI adapter any time they choose

Yeah, for all the people that say, "Who are these people with bricked consoles?" I work at best buy for the geeksquad and see them all the time in returns... and guess what. I was one of them. First one was loud as a harrier, and ended up being a brick.
-So yes there is room for refinement.

I think its funny the people saying its only a year old so why would there be a price drop.
A quick look at wikipedia shows the original xboxs price history.

North America
US$299 (November 15, 2001, Launch Price)
US$199 (May 15, 2002)
US$179 (May 14, 2003)
US$149 (March 29, 2004)
A $100 price drop after 6months. Then basically a price drop after every year.
The gamecube saw a $50 price drop after 6months and the ps2 whad a $100 price drop after 19months but that happens to be the same time the gc and xbox dropped prices.

I would expect the 360 to drop $50 in price by may at the latest really. With the PS3 being so expensive they don't really need to go down by $100.

Even though the premium's retail price is $400, MS is offering incentives/better deals through the retailers this season. Bigger stores like Best Buy and Circuit City are offering $40-$50 worth of free stuff (either a free controller or a free game/gift card combo). A lot of people were able to buy the premium system from Overstock for $340-$350 shipped and Toys R Us just offered a free $100 gift card last week for buying the premium system. I bought mine from Micro Center since they had a $100 rebate plus another $100 cash back for getting their store credit card making my premium system only $200. Plus most of those good $60 retail games have been coming on sale for $40-$45 which isnt too bad either. So yes the retail is $400, but there are better deals around now so you just have to look for them

i bought a 360 in late May. it died in late October. when i called MS, they wanted money. so i decided to fix it myself using the heat gun trick. So that means the new 1 yr warranty doesnt apply to me.

i considered myself an xbox fanboy, but they really screwed me. i spent over $600 and i have nothing to show for it.

so to stay on topic, they definitly need a redesign. my problems are not rare. dont belive me? go to the www.xboxscene.com forums and see for yourself.

NPD numbers can blow me. I can't believe that I'm the only one who noticed that despite having sold half a million in one month, NPD's year total didn't go up....

Personally, I've been waiting to get a 360 for the price reduction, as well as the new chip, so it looks like I'll have to wait a little longer...

- 65nm CPU has nothing to do with HDMI, the video encoding is not done on the CPU, it's a separate chip.

- Microsoft *is* the CPU manufacturer, they contract the foundries directly

- The analog video outputs on the Xbox 360 deliver a higher quality signal than you would get with HDMI. HDMI + HDCP requires the addition of noise to the picture signal in order to hide banding artifacts.

- HDMI is contrained to HDTV standard signals (480i/p, 720p. 1080i/p). Virtually every HDTV out there has to scale the signal to show it on a native panel res that is not pixel for pixel, including Sony TVs.

- Every high end installer in the US (and Comcast techs) will tell you to just use component cables. They are perfectly good, copy protection is not being implemented in HDCP nor does it matter for gaming, and the HDMI cables cost $50-$100 for no visible gain.

- The "true HD" and HDMI market drives are part of Sony's PR machine for PS3. Microsoft grabbed the HDTV segments, so Sony had no choice but to try to up the ante. Unfortunately it's totally smoke and mirrors.

- The human eye has about 1/60th of a degree of resolution. At a 20 degree field of view, that's 1200 pixels. Just to put this in context, 20 degrees is a 30" Widescreen TV at 6'. You have to want to sit closer than that to be able to see a higher resolution. The rescaling and sharpening operations and video encoding artifacts that are a standard part of video now will prevent the extra resolution of 1080p from being truly useful in the next 8 years.

- Any game rendering at 1920x1080 resolution is sacrificing video memory and 1/2 of the available processing power just to get a buzzword. The best looking games will spend more GPU time on fewer pixels.

- The absolute best picture you can get from any console is the VGA connection on Xbox 360, driving the TV at native resolution with the Xbox internal scaler.

The fan noise is very irritating to me. Why the hell can any other manufacturer make a drive with little or no noise, but these people can't. My first xbox360 was bought this December and was DOA right out of the box. Not too crazy about the crappy controller either and why are they having such a hard time and taking so long, to make it backward compatable?

First post? =P