Xbox 360 Price Drop for Christmas?
Xbox 360 price drops are an eventuality if the history of consoles proves to be ongoing. Video game console manufacturers typically launch the hardware at a loss; making it up on the software side. Then a year or so after launch, redesigns, improved manufacturing efficencies and component price reductions allow the video game hardware manufacturer to drop the price, preferably breaking even or squeezing out a small profit. The PS2 has gone through about 6 different revisions up to the current iteration.
So rumors of an Xbox 360 price reduction in time for the Christmas season seems a reasonable question to ask since it has been about a year since the Xbox 360’s release. Reducing the price for the busy holiday season and making Sony’s PS3 introductory price seem even more outlandish seems like good strategy.
However, The Inquirer gives us some good arguments on why that may not happen despite recent rumors of Microsoft’s recent contract renegotiations.
“Due to these rumours and statements, a number of industry pundits are suggesting the drop will come in to effect at a similar time as the launch of the Playstation 3, to inflict maximum damage on Sony’s launch. But despite all of this, it still seems a price cut in 2006 is highly unlikely for two reasons.
Firstly, it would seem odd to drop the price just before the holiday season, considering demand for the console will be at its highest and also that the PS3 will be in incredibly short numbers - further driving up demand for the 360, without the need for any lowering of price.
Secondly, the Xbox 360’s CPU is expected to receive a die-shrink from 90nm to 65nm in the first quarter of 2007, and possibly the ATI supplied graphics chipset too. Although this news is doing the rounds at the moment, its of no surprise and was well known sometime ago by the Inq and others. It’s unlikely that the re-costing of multiple components from Taiwanese companies has effected a plausible $100 drop in price for the 360, however, these die shrinks coupled with the cost refactorings, could present MS with the significant drop in price they need.
By the time the die-shrink and cost-savings are incorporated into the console in Q1/Q2 2007, Sony will be ramping up production of the PS3 to allow for the shipment of much higher numbers of the product than the meagre offering expected at launch, and will also be belatedly releasing the console in Europe. This is the perfect time for the 360 to receive a price cut. µ”
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