The rumors of September Xbox 360 price cuts in the USA came in right on the money when Microsoft formally announced them on Wednesday. Check out the lead paragraph in the press release:
Imagine if friends and families had the ability to instantly watch movies from Netflix, live out their musical fantasies through Rock Band 2 and Lips, star in their own Hollywood classics with You’re in the Movies, or have the power to never miss the latest episode of Heroes—all from one device, starting at $199.*
Yes we are talking the Xbox 360 here, but the console beloved of hard core gamers seems to have suddenly developed broad family entertainment appeal. It almost sounds as family oriented as the number 1 selling Nintendo Wii and gosh, now the Xbox 360 Arcade model described above is $50 dollars cheaper than the Wii.
All snarking aside, Microsoft clearly did what they had to do to try to hold their own in the face of the Wii’s runaway success and the Xbox’s fall into the number 3 spot in US sales behind the Wii and the Sony PS3. The full list of price cuts:
Microsoft had earlier in the week announced a roughly comparable price cut in Japan. Meanwhile it does not look like either Nintendo or Sony will follow suit in the US, since the former is still supply constrained while the latter apparently likes the the position of their high priced PS3 console just fine, buoyed by the fact that while the PS3 is an expensive game machine, it remains a cheap Blu-ray player.
Finally, for fans of the History of Business genre, Dean Takahashi has written a book on the history of the Xbox 360 and VentureBeat has the "final chapter", Xbox 360 defects: an inside history of Microsoft’s video game console woes.
NPD has released their US game console retail sales numbers for June and as had been expected, Nintendo sold 666,700 units to pass Microsoft’s Xbox 360 and become the number 1 selling game console of this generation. More alarming though was that the Xbox 360 fell conclusively behind the Sony PS3 in monthly sales, 219,800 to 405,500 units.
Yes, NPD does not report online sales, and yes, the PS3 was helped by the success of the exclusive Metal Gear Solid 4 game, but it looks like the boost that the Xbox 360 got from being alone on the market in the USA for a year has evaporated and the picture looks worse worldwide.
Finally, while on this subject, Sony and Nintendo did not exactly wow the crowd at E3, but Nintendo did introduce an improved motion sensitive controller and Sony paralleled Microsoft’s E3 announcements with doubled disk storage for the $399 PS3 version and a video download service.
The rumors of an Xbox 360 price reduction came true today, but it turned out to only be a clearance sale on the 20GB version as Microsoft has replaced it with an 60GB version at the old price:
Microsoft Corp. is giving consumers more gigabytes for their buck. The company today announced an Xbox 360 console with triple the storage space of the original console, but for the same price of $349 (U.S.) estimated retail price (ERP).
Available in retail stores in the U.S. and Canada starting in early August, the upgraded Xbox 360 will include a 60GB hard drive for storing the growing wealth of digital entertainment available for the console, including music, movies, television shows and game content. In addition, Microsoft today dropped the price of its 20GB Xbox 360 console in the U.S. and Canada to just $299 (U.S.) (ERP) while supplies last, a savings of $50.
Xbox 360 is just one of three Xbox 360 gaming and entertainment systems Microsoft offers. Microsoft’s Xbox 360 Arcade, which comes with a 256MB memory unit and five Xbox LIVE Arcade games, is a value for the whole family for $279 (U.S.) (ERP), and the premium Xbox 360 Elite console is available with a 120GB hard drive for $449 (U.S.) (ERP).
Presumably cost reductions on the base electronics and on hard drives make it all doable at a profit or not too much of a loss. Don’t expect Nintendo or Sony to follow suit though:
I’m just waiting for Sony’s release now to complete the picture by saying something along the lines of: “No way, our $399 (40GB) and $499 (80GB) models are still bargains, considering you get a Blu-ray player.”
Seriously, Sony has said they’re not going to cut prices during E3, but there is a rumored new model coming in August.
Originally, the Sony PS3 seemed overpriced, but Blu-ray may well have saved the PS3 or the PS3 may have saved Blu-ray depending on how you look at it.
Microsoft wants everyone to know that the Xbox 360 is the first game console in the current generation to sell 10 million units in the USA. Unsurprisingly, they don’t mention that the Nintendo Wii will likely pass the 10 million mark by the beginning of June and it has been on the market one year less than the Xbox 360.
Moreover, the Wii outsold the Xbox 360 in the USA by a ratio of 3 to 1 in April and at that rate will shortly be leaving the Xbox 360 in the dust. Not to mention that Wii units have been profitable from day one too. Still Microsoft can claim a lead over Sony’s PS3 for the big bucks loss leader consolation prize although in April in the USA that lead was only 188,000 to 187,100 units so one wonders how long that will last.