Surprise, surprise, no price cut expected
by Richard Mitchell 
{ Jul 27th 2006 at 10:00AM }
Next Generation more or less shot down yesterday's rumored price cut for the 360. Basically all they did was reiterate everything we said, only more elaborately and eloquently (we're still flattered though). Michael Pachter of Morgan Securities breaks it down old-school analyst style:" ... The company plans to sell 10 million Xbox 360 hardware units over the next year, so a price cut in November would likely impact 8 million of these, costing the company $800 million. At a software royalty profit of around $10 per unit, the company would have to sell 80 million incremental software units in order to be in the same place as without a price cut.
" ... Our model has Microsoft selling only around 60 million total units of software this fiscal year, so in order to break even on a price cut, they would have to sell 140 million pieces of software. Remember, we're talking about profitability for FY:07, not over the life of the 360."
That's a lot of software. Next Gen even mentions Peter Moore's comments to Joystiq during E3: "We had a price drop ... when Sony announced their price."
So, don't expect a price drop before next year. Do expect a software bundle instead.
[Thanks, Thomas Crymes]
Reader Comments (Page 1 of 1)
Trevor @ Jul 27th 2006 12:50PM
Dell is offering a deal on a Premium Bundle, today only. $499 CDN for the premium bundle with an extra wireless controller and PGR3
http://www1.ca.dell.com/content/topics/segtopic.aspx/days_of_deals?c=ca&cs=CADHS1&l=en&s=dhs
mxcl @ Jul 27th 2006 12:56PM
It's a pity, I know a lot of people who want one, having played on mine, but feel it is too expensive.
Extra "value" won't convince them, they just want to pay less.
xbox360 @ Jul 27th 2006 2:37PM
I say we can thank PS3 Fanboys for the that, if they weren't willing to spend that much for the PS3, then perhaps MS would have lowered the 360 price.
asurroca @ Jul 29th 2006 6:11PM
So, Sony's huge pricetag has hurt gamers everywhere, not just PlayStation fanboys, eh? Im' sure Microsoft was waiting on the official PS3 price before they decided for or against a price drop, and as soon as that announcement came, Microsoft laughed all the way to the bank, so to speak.