Xbox 360 price cut "unlikely" in early 2007

by Blake Snow { Jan 26th 2007 at 4:15PM }

While speaking to investors, Lazard Capital says a price cut on Xbox 360 hardware is "unlikely in early 2007." However, they do believe a price reduction could come by the end of the year depending, of course, on the "competitive landscape." As a refresher, here's how Microsoft historically dropped the price of the original Xbox according to Wikipedia:

$299 (November 15, 2001, Launch Price)
$199 (May 15, 2002)
$179 (May 14, 2003)
$149 (March 29, 2004)

The first drop came only six months after the console's initial release. But remember, this was the time Microsoft had gotten into the console game so very aggressive pricing is understandable. The second drop came a full year later, followed by 10 months to bring us to the current MSRP of $150. So can we expect a first 360 price drop this year? Perhaps. That all depends on the "competitive landscape," namely what Sony and Nintendo have up their pricing sleeves.

Reader Comments (Page 1 of 1)

Crono @ Jan 26th 2007 4:22PM

Since it hit the market a full year before any of its competitors (and is still cheaper than Sony's similarly performing monster), I predict price drop in october: nearly a year after the competition showed.

The subsequent price drops will come at approx 12 month intervals.

There may also be a new model to replace the upper tier pricing, launching to coincide with the current premiums price drop.

Paul @ Jan 26th 2007 4:29PM

It WILL NOT get a price cut until after halo 3 - and my guess is that after that it wont get a price cut but a special halo 3 bundle.

SickNic @ Jan 26th 2007 4:48PM

Are they going to need a price drop right away, now that a PS3 price drop is unlikely going to happen for a few years?

Je2037 @ Jan 26th 2007 4:32PM

Halo3+updated hardware = when I'm getting a 360.

Zertoss @ Jan 26th 2007 4:32PM

If I had to guess, I'd say that I'd expect the first 360 price drop to come just before the first PS3 price drop. If the PS3 isn't going to drop in price this year, then I'd say that if the 360's price doesn't drop before September, then it probably won't be dropping this year either, since MS will probably still want to sell their systems for as much as possible over the holidays.

Flit @ Jan 26th 2007 4:37PM

I won't get one until the price drops. The first drop is usually the largest. By then there will be a whole crapload of games i've been waiting to play out by then (Bioshock, Mass Effect, Halo 3, GOW, etc etc) and hopefully cheaper by then

Aex @ Jan 26th 2007 4:46PM

I really don't think MS has to drop the price anytime soon. They definately don't have to drop the price until the PS3 is not only more reasonable, but threatening xbox 360 sales. Also, don't expect a price drop until AFTER Halo 3. I'm saying at least 3months after Halo 3, but it may be longer depending on how the PS3 is fairing in the market and its current price.

Jake @ Jan 26th 2007 4:47PM

There are a lot of people waiting for Halo 3 to get a box. The drop will probably come 3 months after that. My reasoning is that they don't need to drop if for the Halo hardcore. And, Halo is kind of like the Xbox's World of Warcraft in that people into it will log massive amounts of hours without buying many other games. The people waiting for Halo3 may not be the best customers in that they may not buy the most games.

I am basing this on 3 people that I personally know that play Guitar Hero 2 and Madden on PS2 and Halo2. All three say they'll get a 360 once Halo3 drops.

Chessasaur @ Jan 26th 2007 4:48PM

It seems to me that they should have a temporary price cut now in order to thin out the inventories that they flooded getting to their 10 million shipped by 2006 goal.

alhogar @ Jan 26th 2007 5:13PM

Isn't Nintendo supposedly already making a profit in hardware? I'd say their development costs for Wii Play have been recouped many times over by now, so they have the option of keeping the pack-in game and dropping the Wii to $199 at their whim. Look at the additional market penetration DS enjoyed after its price drop...

alhogar @ Jan 26th 2007 5:14PM

>meant Wii Sports actually...

PeteL @ Jan 26th 2007 5:48PM

I predict a 360 price drop reactive to a Wii price drop sometime this year.

Jeff @ Jan 26th 2007 5:50PM

It'll get a price drop before summer. Bank on it.

Summer's traditionally the slowest time of year and often price drops have been timed to coincide with E3. That's probably less of a concern now but the overriding reason for doing those price drops in May - traditionally low summer sales - hasn't gone away. Given MS's announcement of lowered targets for the quarter just a bit earlier today, no doubt they're going to want to be more aggressive this year.

Price cut by May. $249 core, $349 pro. Alternatively, look for some pack-ins in lieu of an actual price cut.

Mr Khan @ Jan 26th 2007 6:10PM

It all depends on 3 factors

1. do they consider the Wii a threat

2. if so, how much of a threat do they consider the Wii

3. if not, when will PS3 price drop?

Arkon @ Jan 26th 2007 6:30PM

I predict a price cut in september at the earliest and the latest in late november.

The price cut packed with Halo 3 and GTA4 coming out could sell a lot of 360s even more than last november and december.

nick @ Jan 26th 2007 8:53PM

Microsoft would be stupid to not have a price cut this year.

Waiting until the end of the year would also be somewhat stupid, as I'm guess that's what Halo 3 will be released, which should automatically increase sales

They would be wise to have the price cut by the 2nd quarter of this year to spur sales earlier.

And then allow software to spur sales in the 4th quarter.

But that's just me...

David @ Jan 26th 2007 6:59PM

It doesn't really need a price drop, the PS3 is outragously price. I think maybe for Christmas it will get a drop so it will get into the Wii's marketshare.

Chris Shima @ Jan 27th 2007 5:17AM

I agree with Paul. No cut until after Halo 3.

Henry @ Jan 26th 2007 7:07PM

MS will try to hold off as long as possible. Instead of lowering the price they will make 360 more attractive by offering bundles (already done in Canada) or via mail in rebates/time limited promotions.

Sony is the one to watch. Even if they can't really afford a price cut they might have to do it if PS3 sales slows to a crawl.

Chris Daykin @ Jan 26th 2007 7:47PM

Remember that it was intel that designed the hardware, and the reason that the xbox had a slow and small price drops was because intel said no. This time, because microsoft control the patents to the chips in 360 (it's no longer a PC in a stupid box) then they can control the hardware prices easier. So expect a quicker price drop that on the first xbox.

Andrew Fong @ Jan 27th 2007 12:25AM

What Microsoft wants is for Halo 3 to be released in the summer and then to drop the price before Christmas. Unfortunately for them, that depends entirely on the whims of Bungie, and they're probably looking towards November (it's Bungie's favorite time of the year).

An alternative to the normal price drop is to get rid of the Core versions, price the Premiums at 300 USD, and then sell a new IPTV / bigger HDD version at 400. The 300 dollar price will be the one used by marketing for console comparisons ("a premium 360 for HALF the price the price of the PS3" / "only 50 dollars more than the Wii with twice as much graphics power").

At the same time, they'll keep a 400 dollar version out there to rake in the dough from all the people who feel the 300 dollar one is "gimped". It's the same idea as they had behind the Core / Premium SKUs, except the 300 USD offering actually is pretty decent this time around.

Steve 3.2 @ Jan 27th 2007 12:40PM

There are a lot of factors that will go into the timing of a real price drop. But keep in mind that there were a ton of deals this past holiday season with free controllers, games, and rebates that were available everywhere. So essentially we've already seen a price drop.

Without those specials, I bet there would be a lot more 360s sitting on store shelves. And I think those deals and Microsoft's lowered first quarter shipping estimates show that there is a large decrease in demand for the system already. But does this warrant a price drop at this time? Probably not.

The 360 has a lot going for it this year, but MS also expects a lot out of it. They're putting a lot of work into making the machine the center of your living room and have been adding features and services at an amazing clip. Of course it's still missing some of the basics like a web browser, but I bet we'll see one of those sooner rather than later. And Halo 3 will sell lots systems no matter what the price of the console is. (Though it could be argued that many of those people already own one.)

So when will it happen? With a guaranteed system seller in Halo 3, plus a delay in the die shrink of the main processors, and probably a 'reconfiguration' of the premium box, I wouldn't hold my breath for a $200/$250 360 this year unless Sony significantly drops the PS3's price. (Keep in mind that the drops for the original Xbox were to keep pace with a same priced PS2, even if MS announced them first.) But I bet MS will discontinue the core package, reposition the pro as the new entry level package, and start selling a new 'pro plus'/'platinum' package with a larger hard drive and some other goodies thrown in. (Come on MS -- $100 for wireless networking? The $250 Wii comes with that built-in!)

Timoty Link @ Apr 12th 2007 9:01PM

Supply and demand people. Of course they'll sell a lot more 360s when Halo 3 and GTA 4 come out...but they'll sell an INSANE AMOUNT if a price drop comes around the release date of either game. Demand is already ridiculous for the 360, Halo 3, and GTA 4...trying to milk people--already willing to spend $120 for games off the bat and at least $300 for the console--for an extra $50-100 would be counterproductive, especially for both games. i can see milking the current console price for one, but not both games.

I don't think you can really use the PS3 as a marker either, because its sales are terrible, the games are few and far between (whereas the 360 just finally started making GREAT games about 9 months ago), and Sony really has messed up about every way possible. Its almost like they challenged themselves to blow the PS3. The only upside for the PS3 at this point and for the foreseeable future is that its a $600 Blueray player...that you'll feel stupid about using as a Blueray player after 6 months, minimum (as I did with my PS2 many years ago...), and THAT MOST MEN'S WIVES AND GIRLFRIENDS WILL PISS AND MOAN ABOUT HAVING IN THEIR LIVING ROOM.

Why? 1.) cause they see video games as competition for some reason..."what are you doing? are you coming to bed?" LOL. 2.) cause they seem to hate/not understand components, period. My god, they even hate big screen TVs!!!!! (Now that I think about it, if you want one for the player, the PS3 is definitely a better option than that awkward attachment for the 360) HD TVs haven't even caught on enough yet.

I've thought about buying one just for the Blueray player, but then I think about how dates seemed to feel about watching DVDs on my old PS2...