Quote:Microsoft Corp., the world's leading maker of software, is earning money selling the Xbox 360 hardware, according to updated teardown analysis from research firm iSuppli. The information means that the software giant has managed to lower the price of its latest game console by nearly 40% in one year.
According to iSuppli's most recent analysis, the premium version of the Xbox 360 game machine equipped with hard disk drive has a manufacturing and materials total of $323.30, based on an updated estimate using costs in the fourth quarter of 2006. This total is $75.70 less than the $399 suggested retail price of the Xbox 360. Even though it is obvious that Microsoft still has to subtract freight, toll, retail partner's profit and other possible charges, it is highly likely that Microsoft has either managed to reduce its loss to minimal, or is making a tiny profit selling the $399 flavour of the Xbox 360.
A year ago the total bill of materials (BOM) cost for the Xbox 360 Premium, including hard disk, the DVD drive, enclosures, the Radio Frequency (RF) receiver board, power supply, wireless controller, cables, literature, and packaging, reached $525, well above the retail price of $399, according to iSuppli. Considering the up to date BOM, Microsoft has managed to reduce the pricing of its console by over 38.5%.
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Seems to be right in line with their project annual cost cuts. I wonder how long it will be before they pass on the savings to consumers?
They should do it in the spring when Sony starts getting more shipments of the PS3 out. I think it would give MS a huge edge. I also want them to do it then because I plan to buy a 360 when they cut the price, and sooner is better than later.
The only question is, how big should the price drop be to get the best effect... price drops are like a game -- everyone's waiting for the other person to go first before they do... while higher prices might help sales, it'll hurt profits, and no one likes that. So they all wait until one drops their price, when all of the manufacturers drop them in short order.
So then... GC dropped in price about six months after it came out, when the PS2 and Xbox dropped their prices too. Will it be about that long again, or will it be even less time? If you drop your price too soon early adopters get annoyed, but if the X360 Core goes down to even or below the Wii's price, how long could they hold it where it is before they drop it, with their "affordable price and cheaper than the competition" focus?
A Black Falcon Wrote:The only question is, how big should the price drop be to get the best effect... price drops are like a game -- everyone's waiting for the other person to go first before they do... while higher prices might help sales, it'll hurt profits, and no one likes that. So they all wait until one drops their price, when all of the manufacturers drop them in short order.
Microsoft is on their own schedule. They're trying to stay ahead of the competition so I suspect a 360 pricedrop in the second half of 2007, or maybe by this time next year when they even further reduce their manufacturing costs. They'll drop the price when sales begin to stagnate at the current price.
Quote:So then... GC dropped in price about six months after it came out, when the PS2 and Xbox dropped their prices too. Will it be about that long again, or will it be even less time? If you drop your price too soon early adopters get annoyed, but if the X360 Core goes down to even or below the Wii's price, how long could they hold it where it is before they drop it, with their "affordable price and cheaper than the competition" focus?
Are you talking about the Wii?
