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Can Even Microsoft Afford to Buy the Gaming Market?

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This is the day of the big discount: all of Microsoft's Xbox 360 units have officially dropped price by $50, giving the company the cheapest entry point for the would-be gamer. But this smacks of desperation in a whole lot of ways, for example, like this being the second price drop Microsoft has tried this year alone. When you consider the number of units they sell normally and how financially badly that Microsoft does in this market, you have to wonder if even with those deep pockets it's possible to buy enough Christmas cheer.
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industry.bnet.com
TheDynamo - contributor
Published: 475 days 16 hours ago | Article | Xbox 360
 
 

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LoveWaffles - 477 days ago
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1 - This...
article will cause nothing but a headache for everyone.
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mohib-uddin7986532 - 475 days 15 hours ago
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1.1 -
Microsoft looks likely to lose the console war
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Chubear - 475 days 13 hours ago
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1.2 -
I am interested in seeing if this will have any effect on wii sales though.
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littletad - 477 days ago
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2 - "how financially badly that Microsoft does in this market"
Hmm, something vaguely assuring about that sentence structure.

"As for games, the Xbox 360 floated on Halo 3 sales last year"

Really? What about Call of Duty 4, Mass Effect, or Bioshock? Or what about the 5th paragraph? I have absolutely no idea what this writer is trying to say. Is he saying the Wii provides us a gaming experience and Microsoft doesn't? It makes no sense.

It's articles like these that should be exclusive to the open zone.
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Death - 476 days 6 hours ago
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3 - Wow.
The Xbox 360 Pro launched at $399.Three years later, it has been "slashed" 25% to $299. They also introduced a more expensive SKU, the Xbox 360 Elite which retailed at $499 at launch and has been cut 20% to $399. The 360 Core that originally launched at $299 is down 33% which brings it to $199 after 3 years.

The PS3 which launched almost 2 years ago retailed for $599 for the 60 gig and $499 for the trimmed down 20 gig. The 20 gig was dropped from retail and not replaced. The 60 gig was also dropped when Sony cut out some of the hardware to launch the 80 gig. Shortly after that, the system received it's first price cut of $100 to make the 80 gig $499. Sony then cut out some more of the hardware and features to bring a 40 gig to market which sold for $399. The guru's at Sony then reconfigured the 80 gig, removing more of the features and hardware to make a new 80 gig which will retail for $399. That is a $200 price drop in less than 2 years and yet we still hear how Microsoft is desperate.

To recap,

Sony has stripped down the hardware and removed features in order to drop the price $200 in less than 2 years.

Microsoft cut all three SKU's $100 in three years, but added a higher line SKU which still retails for the same launch price the 360 came out with. The Core was repackaged/upgraded to the Arcade which has more accessories in the box and the Pro got more storage. Essentially they lowered the price and gave more to the consumers while Sony took stuff away.

Yeah, Microsoft is the desperate one here...

-Death
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Greysturm - 475 days 16 hours ago
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3.1 - If you bother to read the article...
It in no way states that this desperation is caused by sony selling better than it but rather the competition with nintendo. It even states that sonys desperate moves of last year didnt give it an advantage in sales (at least in north america).

It worries more about the subsidies that the 360 most be enduring in order to sell since they havent posted a profit in the entertainment division even last year with Halo3 and other big titles so a pricecut in the red might not be a good thing considering software its not posting enough revenue to get the division on black lowering the cost of the hardware is undoubtedly a higher subsidy move that will cost the division more in search of more marketshare and wonders about this idea of pouring money over to try to win marketshare.

Edit: Disagreed? then what does the article say guys i cant find a Sony ftw > MS FTL quote. Some people really need to learn the meaning of agreeing and disagreeing hell its n4g will just make it up as we go along in this futile effort.
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Funky Town_TX - 475 days 16 hours ago
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3.2 - @Death
You are not allowed to do that on N4G. Do what you say. Speak the truth you say. I am happy the 360 got cheaper and I hope it sales like crazy so that Sony will have to do something because I want a PS3 for Killzone 2.
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AclayPS3 - 475 days 15 hours ago
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3.3 -
@ Death

We all know how Sony has dropped the PS3's price, but the PS3 debuted at a higher price than the 360 did.

The reason why I still think the price drop was more of a move of desperation is because even at the $279 price point (just $30 bucks more expensive than the Wii) the Xbox 360 wasn't able to outsell the PS3 in the U.S. so far this year. I mean come on people, you would think that the 360 would outsell the PS3 at the $279 price point, but even that still wasn't enough.

I'm pretty sure that if the 360 had been outselling the PS3 in the U.S. this entire year by substantial margins on a monthly basis like the majority of last year, this 360 price drop probably would not have even happened or Microsoft probably wouldn't have cut prices so deeply.
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Death - 475 days 15 hours ago
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3.4 - You don't simply put out a product at a low price and have it sell.
At the pricepoint the PS3 and Xbox 360 are at, it is still catering to the hardcore gamers. The hardcore gamers are not going to look at the Arcade unit for $199 and consider it since they will still want the Pro or Elite. Casual gamers will find the Arcade more appealing since it is at a more affordable price, but the problem Microsoft faces is the negativity by some hardcore gamers that still feel the Arcade is a rip off. Word of mouth is incredibly important when marketing a product a fanboys on both sides of the console war are very vocal.

The new Xbox Experience coming out with the Fall update should appeal even more to the casual gamers which coupled with the lower price point and Holiday sales should do quite a bit to increase sales and interest in the console.

None of this is desperation, it is marketing. All consoles lower their retail prices over time. If anything, Microsoft has taken more time than usual to make price cuts while the PS3 has cut them faster than what is typically normal.

As for the PS3 cutting prices faster because it launched higher, that isn't a good reason to drop prematurely. It was a bad call By Sony which is why they have changed everything from management to hardware design. They honestly thought they could bring out a very expensive product and still reach the mass market with it. They were wrong.

-Death
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timmyrulz - 475 days 13 hours ago
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3.5 - @DEATH
Its pointless typing anything thats common sense, especially when it reflects bad on the ps3 because fanboys dont want to hear it, unless your typing things saying how great the ps3 is or how rubbish the x360 is you may as well be flogging a dead horse.

As to what you had to say, i agree totally, bubbles up
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Hellangelzx - 475 days 15 hours ago
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4 - See
What they're doing is selling the Arcade Unit for cheaper than the wii.

That I believe is stupid. Yeah the Arcade Unit is nice for people who don't care about hdds or w/e and all the rest of that fancy stuff, but eventually, gaming will be all about High Def, large Hard Drives ect. Once you buy an arcade Unit, you don't have many options with it, and if you ever want to upgrade, you're stuck buying another one.

My opinion, don't let it bother you guys too much.
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Death - 475 days 6 hours ago
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4.1 - How are your options limited?
If you need the storage a HDD provides, you simply need to pick up an Xbox 360 HDD in whichever size you need and slap it on. It takes longer to remove it from the blister pack than it takes to click on. The smart money is on buying an Arcade for $199 and a 120 gig HDD for $149. This would give you a white Elite for $349 with an MU to boot.

-Death
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IzKyD1331 - 475 days 15 hours ago
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5 -
as a PS3 owner, I do have to admit that the writer of this article is pretty biased
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Some_One_Plays - 475 days 14 hours ago
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5.1 - IzKyD1331
When you say "Bias" you mean that his (Erik Sherman's/Author's) preference towards a particular result, in this case the price cut is over shadowed by facts?

Generally speaking every piece article/writing is "bias" because everyone has an opinion; it's when the opinion over shadows what's really there. I would be "bias" to say that the PlayStation 3 will win, but claiming someone "bias" would mean that Sony is calling it quiets and I'm still saying that.

So having a different opinion doesn't make someone "bias" and I generally see this on the site a lot.
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Mike134nl - 475 days 15 hours ago
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The first price cut was initially rumored to be a 100$ dollar price cut, instead it was 50$, simply because they had nothing to worry about. This 2nd price cut of also 50$ brings the total to 100$. Doesn't smell like desperation.

Also looking at the attach rates of i believed was 7 games per consoles for the xbox 360 is a clear indication that there are other games than halo 3 on the xbox.

Selling the console at a lower price was always the plan, that's why Microsoft tries to reduce cost of manufacturing. Also considering software sales are the most important income for Microsoft it is only logical to try to sell more by lowering the price.
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omegaheat - 475 days 15 hours ago
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7 - Huh
Why does he care so much about Microsoft's money? The article didn't even mention the fact that Sony's PS3 causes even more losses of revenue than the Xbox360 causes Microsoft. The Xbox360 took 3years to reduce the Arcade SKU by $100. After 3 years that is not uncommon at all. In fact, I think the console would have dropped in price alot sooner had it not been for that impressive warranty update for those who were plagued by the defected systems. That warranty caused Microsoft alot of money. I for one have no complaints about a company so willing to sacrifice things to further improve on a great product. I see these articles coming in hour after hour with negative remarks about Microsoft's price drop. Tell me one consumer that's ever been angry about saving money; especially when the condition of the economy will cause low spending this holiday season. The Wii sells well because of supply and demand along with innovation as a supplement. Only and only Nintendo makes money there. Just face the fact that most people who buy the Wii are casual gamers who buy buy the console either with one game in mind or for the Nintendo mascot games. The third party developers keep the games industry alive. Sony has just begun to sell as much as 10,000-20,000 more consoles a month than the Xbox360 for 7 of the nine months this year. So suddenly the console that sells the most games and has the best online service gets dis-credited for irrelevant reasons because of dropping the price of the console to mass market. Now everyone who couldn't afford the console have now become a hundred dollars closer to owning one. The PS3 was slashed $100 in less than a year after its release and that has been swept under the rug as an 'act of desparation'. These articles are so biased and the timing of them is not coincidental. All of a sudden saving dollars is a bad thing. Stupidity. And the comment implying the lack of good games this holiday was just ridiculous.
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7.1 thenickel | 475 days 14 hours ago - User only got 1 bubble - Show
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PirateThom - 475 days 6 hours ago
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7.2 -
Are you serious?

Were you here a year ago when it was anti-PS3 article after article and fanboys proclaiming it was the end of Sony?

It's all karma and Microsoft and the fanboys are getting what was coming to them.
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soul899er - 475 days 15 hours ago
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8 -
wow, im all for PS3, but that just sounded like a biased fanboy rant rather than a real article
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Morgue - 475 days 12 hours ago
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9 - meh
Consumers by what they can afford and if I can afford the PS3 then that's what I am going too buy and vice versa. For people too say that the 360 has a better game library or online service is utter non sense because I have XBL and a majority of their titles stink and half of the older Xbox catalog isn't even backwards compatible. Yes. I am also aware that the newer models of the PS3 are not BC but for those people that bought one when it came out, they have a catalog of games available that span over 12 years. I canceled my XBL subscription a few days ago because too me, M$ is joke and they had their chance to prove too the game industry that they were a force to be reckoned with and they are not. Their line up consists of short terms games with no longevity unless it's Halo, Viva Pinyata, Ninja Gaiden or Gears and when it comes too creativity they have buy or lure away other companies titles. Now this is just my opinion and I could care less if you agree with me or not but I am done with M$ because they truly are a joke especially with two price drops this year and it's starting too looking like they are competing with the Wii and the PS2 instead of concerning themselves with the task at hand.
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badkolo - 475 days 11 hours ago
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the fact that he even says this could be a desperation moves kills all his credibility, as i remeber sony dropped the price of the ps3 drasticly cause they wherent selling in the first year, now thats desperate, but microsoft took 3 years to do so.

this article is rubbish
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Firstkn1ghT - 475 days 10 hours ago
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11 -
With the 360 being such a success, Microsoft should use those funds to purchase a big hitter like Capcom or Sega for the next Xbox. Have a few titles ready for launch like Dead Rising 3 or maybe bring back fan favorites like Onimusha or Panzer Dragoon Saga. One thing is for sure that the gaming division for Microsoft is definitely seeing a bright future.
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lowcarb - 475 days 9 hours ago
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11.1 -
I really wonder what the next box will launch with and have a feeling that MS is going to come out swinging very hard lol.
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dcbronco - 475 days 9 hours ago
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12 - This article is a joke.
The site appears to be American, but states this is the second 360 price cut this year. It's not. Microsoft is making money on the 360 so I don't understand how he believes the price cut will cause them to lose money. The Home and Entertainment division made money last year. And I believe the 360 was one of the only profitable product in that group. Microsoft signed new deals with several of the manufacturers that produce parts for the 360 this year. They also had a die shrink on the GPU. The die shrink is a huge money saver because you get more chips out of each silicon wafer. If you want to be a real reporter for a real site or publication, learn a little about the subject matter. Somebody at this site needs to check the stories that are being approved. Too many make gamers look like sheep for sites trying to get hits for advertising money. It also makes the site not worth coming to because you have to look through so much BS to get to a few good articles.
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Rob Hornecker - 475 days ago
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13 -
Has anyone ever noticed that each time they reduce the price of a game console ,that the quality of the games that come out for it start to SUCK? Also I feel that the quality and type of people you play with online goes downhill also when console prices drop.

I guess the latest price drop is just a sign of the economic times that are hitting all of us. Now if they could just drop the prices of the new games down a bit.
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