MS knows console price sweet spot, they aren't going there

by Alexander Sliwinski { Jun 11th 2007 at 3:25PM }

Last week, Bloomberg.com had an article which dropped a bunch of quote bombs from top Xbox executives. One of the quotes was David Hufford, Xbox's director of product management, saying, "We are well aware that the sweet spot of the market is really 199 bucks.'' At the time, we said knowing and doing it are completely different -- we were right. Apparently, Hufford's quote was misinterpreted by some to mean a price drop was coming and he put a stop to that.

Hufford wrote to Gamerscoreblog that people are getting all worked up over an interview, which although published now, was done two months ago while discussing NPD data with Bloomberg. He says the Xbox 360 is selling well (even the Elite) and with their "great portfolio" of games they have no plans to announce any kind of price drop "anytime soon." We don't know if "soon" means this quarter or this year, "soon" is such a relative term. Looks like those waiting for an Xbox 360 price drop are just going to have to keep putting change in the coin jar. Once again, it all depends on the definition of "soon."

Tags: bloomberg, hufford, xbox 360, Xbox360

Reader Comments (Page 1 of 1)

MaulerX @ Jun 11th 2007 6:31PM

Until SONY drops the price of the PS3, M$ has no reason whatsoever to drop the price of the 360.

Anam @ Jun 11th 2007 3:35PM

Take your time Microsoft. I don't want to buy one until you get the bugs out anyway.

Joshua @ Jun 11th 2007 3:37PM

I know everyone want's a cheaper system but you can't really blame them for not lowering prices yet. Another thing is to think that the price point is going to drop from $399 to $199 which I think a lot of people are thinking.

I guess a drop of the Premium system to $299 or maybe $249. I also don't think we would see any lower price until they switch to the new 65nm stuff.

I would be shocked to see any of this happen before Halo 3 is released. I know that's crappy thinking about a price cut and new 65nm after new people buy systems for Halo 3 but that is more of the 'norm' than an exception. I would say new spring sometime.

Todd @ Jun 11th 2007 3:41PM

Well until it does hit the $199 mark and the 65nm chips are out I won't be giving them my $. I just haven't been excited about any games out on the 360 so far like I was with the first Xbox. Forza2 is about it so far. I would already own one if they had made a new Steel Battalion game for it that let me use my controller.

Scott @ Jun 11th 2007 3:42PM

They aren't going to announce a price-drop until the day before the price-drop is enacted. Also, they will discount any rumors or speculation of any price-drop until the time of the announced price-drop.

This goes the same for any console so as not to kill existing sales.

The 360 will be two year's old this holiday. They are due for a price drop.

Tony Blair @ Jun 11th 2007 3:49PM

Maybe Bill Gates will hault future production of any Xbox 360's and completely revamp the console to the likings of Todd and call it the "Todd 360".

Stevo @ Jun 11th 2007 3:51PM

You'd imagine that Microsoft would hold their first price-cut for a post-Halo 3 slump in sales (my guess is late summer/early autumn '08)...I guess we'll see. Seems like the White Box is selling fairly well as is...

Striderhayasa @ Jun 11th 2007 3:51PM

Isn't MS still losing money on 360 hardware. Why would they price drop if this is the case?

Anam @ Jun 11th 2007 3:53PM

First off, they're not going to lower the price until after Christmas. They'll have plenty of hype from Halo 3 and (possibly) Mass Effect and Lost Odyssey, if they're released this year as planned.

Microsoft won't need to compete with Nintendo this holiday season, since Wii's will still be sold out and all of the parents that were going to buy a Wii for their kids will buy a 360 instead. No price drop necessary. Just easy customers left over from Nintendo.

The PS3's situation probably won't change much until next year, since their most anticipated titles (Metal Gear Solid 4 and Final Fantasy XIII) won't be released until at least next year. The only wild cards that the PS3 has are a price drop (unlikely) or one of the less-known games becoming a major hit (possible).

With limited game selection of the PS3 and the Wii having shortages, Microsoft has no reason to worry until next year.

Rubix42 @ Jun 11th 2007 3:55PM

I agree with most everyone on here. MS will not drop price until after the Holiday push wears off, and then they'll use it to make a surge beginning of 2008. They'll push even more systems with Halo 3 that way . . .

Doc @ Jun 11th 2007 3:59PM

look it makes sense to drop the price...esspecially on the core a $199 price point on that item would be nice. Not to mention a $249 prem. would be a great decision on MS part.. Look nintendo isn't winning this war of sales based off of games..cause there isn't any that are that great or that you get tired of after 30 min. it's killing in the sales dept. because of one thing and that is price! the wii is just a lame ass gamecube(and i'm a massive nintendo fan too) and the games show it, but does it matter, no it price that is going to win more martket share peroid.....

Jake @ Jun 11th 2007 4:05PM

Joystiq Editor's,

Please post the following few paragraphs as commentary by industry expert analyst, Willie Everscore (me). My friends call me Jake.

"...Willie goes on to say that the 360 will not get a price drop until some time after Halo3 drops. This is because many people are waiting to purchase a 360 until this particular title is available, and will purchase one once it is. In addition, the 65nm chip, which reduces cost, will be available conveniently after Halo3, making a price drop easier from a financial perspective.

MS will likely then wait until after Christmas break. They could possibly drop the price in November to get the holiday rush. But, they cannot drop in October because it is too close to Halo3 and they would piss too many people off to do it in December after many people have gotten 360's for Christmas shopping. November, January, or Later is when the drop will occur.

Also, $100 seems the most likely target. But, don't be freaked out if they drop it $150 or even, omfg, $200 for a premium. Keep in mind this thing has been out for pert near 2 years now.

The only way that MS would drop a price early is if Sony forces their hand. If Sony gives a drop, MS gives a drop. But overall I would expect MS to strike first.

Mr. Everscore goes on to say MS could also find a dirty stick, fashion a sharp point out of one end, bend Sony over, insert said stick, then snap it off. This effect can be achieved, figuratively, by dropping the cost of the 360 by $100 and bundling it with Halo3, or simply dropping the price $100 str8-up in time for the Halo craze. But, they will likely vag-foot it and make money off of Halo3 sales rather than using it to sell 360's..."

Shadow El @ Jun 11th 2007 4:28PM

Okay, MS, you can keep the 360 selling at $400.

Of course, you'll sell less, but what do you care, it's only the profits you aren't making anyway, right?

Plus, I can't afford one at $400. >_

Rubix42 @ Jun 11th 2007 4:49PM

@ Doc #10.
Sorry to say this doc, but Nintendo is winning on price point AND it's games.
Case in point: My Family. When I got the Wii, my wife (who doesn't play games) immediately bought a couple of games to play. Her parents came over, played Wii Sports, and bought a Wii off Ebay the next day, my parents came over, played Rayman, and bought a Wii for my nephew for his birthday.
It is the casual games market that is pushing Nintendo's success. My in-laws and nephew don't own Zelda, but they have Big Brain Academy on pre-order and are picking it up the very first day they can.

It's a changing medium. It's not just action titles anymore. Puzzle Quest and games of that ilk are leading the charge and growing the industry.

Karen @ Jun 11th 2007 4:49PM

I'll buy a 360 at $250-$300 for a premium bundled with a game and by that time a lot of the games I want will be $20-30. I have a stack of 40 unplayed games for the GC, Xbox, GBA and PS2 that I've bought really cheap. I have enough to keep me busy I can wait.

syco @ Jun 11th 2007 4:51PM

Well I won't buy one at the current price. They can delay the price drop as long as they like. I'll just delay my purchase. (Note that this doesn't mean I will definitely will buy one when the price drops, that depends on how much the drop is. I can't see paying more than $300 for one with a hard drive, and that's pushing it. $250 would be more certain.

t-mek @ Jun 11th 2007 5:08PM

I imagine that by Christmas 2008 they will drop to $249.

http://ionglow.com

Rare Hare @ Jun 11th 2007 5:30PM

i'm not really sure i care when they drop the price. i'm picking one up as soon as i can secure one with a 65nm chip, and no sooner than that.

James @ Jun 11th 2007 5:46PM

I predict price drops either for Christmas time OR if Sony does one first.

Anam @ Jun 11th 2007 6:10PM

I'm not sure if Microsoft would drop their price even if Sony dropped theirs. I mean, if Sony drops the PS3 price to $499, it's still $100 more than a Premium 360, so Microsoft still might hold out.

However, I could see a bundled package: Xbox 360 Elite with Halo 3 included for $479. It wouldn't exactly be a price drop, but would give adopters a bit more incentive.

TK00 @ Jun 11th 2007 6:28PM

Heh, sounds like he got yelled at by someone upstairs. Bean counters don't like people even suggesting future price cuts, because people start waiting instead of buying.

Anam @ Jun 11th 2007 6:32PM

@TK00

Yep. Of course, the red ring of death alone is making people wait instead of buy, so price drop rumors aren't the worst of their problems.

micheal82 @ Jun 11th 2007 6:42PM

They can't say that there will be a price cut soon because if they announce that there would be a price cut in November because people would not buy it until November. Microsoft is trying to sell as many system as they can before they have to issue a price cut. With Halo3, Gta4 (even though its on the PS3), Bioshock, Blue Dragon and other games that are coming out later this year the 360 will see a jump in sales withou a price cut.

Tony Blair @ Jun 11th 2007 6:42PM

Forget the console, drop the price on Platinum Hits to 20 dollars.

Kompressor @ Jun 11th 2007 7:27PM

this shouldn't be surprising to anyone. Why would microsoft say "$199 is the sweet spot for consoles so we are going to drop the price in August" how many people do you think are going to buy the console now?

Don't expect an announcement until a week maybe even a few days before they drop the price. My guess will be end of summer when they decide to put the nail in sony's coffin

Pete @ Jun 11th 2007 7:42PM

I love how people think that at some point the boxes on the shelves are going to say "Now with 65nm chips!" or something. There is pretty much no way you are ever going to know whether the system in the box that you buy will have 65nm chips or not. There are no manufacturing dates on the box, and they will not change the packaging for that exact reason because nobody would buy the old ones then. If you want an Xbox 360 just buy one and get the $50 extended warranty. If 3 years of warranty isn't enough for them to work out the kinks I'd be surprised.

Jettic @ Jun 11th 2007 8:32PM

How do you guys expect Microsoft to drop the price of the system if they aren't bringing in any profits from there gaming devision?

Tony Blair @ Jun 11th 2007 8:50PM

Fanboys aren't concerned with fiscal responsibilites or the realities of the marketplace.

I will only buy an Xbox 360 when they bundle it with a PS3, Wii, Dreamcast, and Virtual Boy with a price tag of 49.99.

Prime Minister Out.

rfom @ Jun 11th 2007 10:22PM

Big mistake not to cut the 360 price. Remember the PS2? Sony was making a large loss (over USD150) at launch, yet they cut the price by USD100 just 1 1/2 years after launch - the equivalent would have been MS doing the same in March 2008.
Sony would love it if MS keeps this prce as long as it can. The 360 costs fell 40% in year 1. The PS3 would save even more, with 65nm, no PS2 chip, cheaper BR diodes - expect the cost to go from USD850 per unit to USD400-450 by end of this year.
And its not as if the 360 exclusives lineup is that great. 20 months and just Gears, Crackdown and Forza 2?
And "the great one" Halo 3 is running full tilt against 10 other awesome titles, all coming out around the same time - GTA4, UT3, Haze, Crysis, Assasin, Heavenly, MGS4 possibly.

nick @ Jun 12th 2007 6:07PM

How much you want to bet Sony drops their price first? Microsoft had their opportunity to lower their pricing ahead of everyone else, but they're wasting it. This is why the Wii is catching up to the 360 and will eventually overtake it.

The funny thing is, Microsoft had the lead by a year, yet how much do you want to bet that all the consoles lower their pricing around the same time?

If they do, heads should roll at Microsoft for bungling what should have been a no-brainer.