Ballmer hints at Xbox 360 price cuts
By John Pospisil
Microsoft CEO Steve Ballmer has strongly hinted that the company will look at cutting the price of its Xbox 360 in a recent financial analyst briefing in New York.
Ballmer said that the company would review the price of the Xbox 360 to ensure that it remains competitive as well as profitable:
“The price of sale versus the cost of sale of Xbox, we are going to be smart about that. We’re going to be competitive in the marketplace, but we’re also going to be smart on trying to get the best gross margin through to the bottom line that we can, if I could say it that way, as it relates to Xbox,” Ballmer told analysts.
Having said that, Ballmer dropped his strongest hint yet that Microsoft would be looking at cutting the price of its popular console.
“So, I think every console in the world has had a price decrease sometime in the first few years. I don’t know whether we’ll have a price decrease in the first few years, and I don’t want to comment on that, but I will highlight for you that every console has had a price decrease in the first few years,” he said.
As you may recall, TECH.BLORGE.com reported on the possibility of a Xbox 360 price cut back in November when Nintendo was crowing about having sold 600,000 Wiis. Robbie Back, Microsoft’s President of Entertainment and Devices at Microsoft told the San Jose Mercury News, that Microsoft is in a position to rmake life really difficult for Sony and Nintendo:
“Because we were out there first, we have a bigger installed base of consoles,” he said. ”We can drive down the manufacturing curve sooner and faster. And because we designed a box that was fundamentally easier to manage on costs, we’re going to have that advantage.”
Back also made the observation that what’s important over the life cycle of a console is “who has the cost advantage, who can price most effectively?”
The next question on console fans’ minds is when might such a price cut come? Well sooner than you might think, with one European chain, Makro, selling the Xbox 360 Premium console for 199.99 pounds (US$465) plus 17.5% Value Added Tax (VAT)in the UK (Amazon sells the same pack for 238.29 pounds (US$388) plus VAT ), according to a report in The Inquirer.
While it’s not clear whether this discounting is the “price cut” that Ballmer foreshadowed, the only way that Xbox 360 prices will go in the medium term is down. This is going to make life difficult for competitors, especially Sony with its relatively expensive and hard-to-get PlayStation 3.
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Stumble It!
February 19th, 2007
Heopfully this means that the Xbox will sweep aside the Wii and PlayStation 3, and assume its position as the leader in next generation gaming.
February 19th, 2007
It looks like the article wasn’t finished or something.
February 19th, 2007
Fixed. There was a missing word. Sorry about that - I had to meet a deadline.