Microsoft cuts price of 20GB Xbox 360 by $50 to make way for 60GB model
Starting Sunday, July 27, Microsoft’s mid-range Xbox 360 consol with a 20GB hard drive will cost $299. The updated Xbox 360 is set to arrive in stored in early August. The new 360 will cost $350 and will have a 60GB hard drive, which will give the consol significantly more space for storing games, TV shows and movies Microsoft sells on its Xbox live marketplace wed site. The 60GB Xbox 360 consol is also said to have some extra appeal with streaming movies and TV episodes through high speed internet offered by Netflix.
Although Microsoft adjusted its price of the 20GB 360, it did not change the price of the more basic Xbox 360: Arcade version (256MB, $280) or the Xbox 360 Elite ($450, 120GB). Microsoft released the Xbox 360 1 year ahead of competitors Nintendo corp. and Sony corp. As of the end of May 2008, Microsoft had sold 10.3 million Xboxs in the US. By comparison, Nintendo had sold 10.2 million Wii consoles, and Sony had only sold 4.5 million Playstation 3 machines. While Nintendo has consistently kept the price of the Wii at $250, Microsoft and Sony have been scrambling to cut their prices while still being able to obtain profit.
3 comments:
I was wondering if there was any information on why they only dropped the price of one and did not change the price of the other two? Is the $350 dollar one the most popular? Was there an outlook discussed on what this change will do to their overall profit?
Rumor has it that Microsoft is considering eliminating the Arcade version of the XBox and to answer why they marked down only the middle product and not all three: While it may not have been the most popular, there could have been an overabundance of the product lying around on production line warehouse shelves. The markdown is said to be temporary, "while supplies last" and it could be a tactic used to help Microsoft maintain their current production. Perhaps the highest quality XBox IS the most poopular and Microsoft is running low. This brief markdown is causing enough ruckus to draw attention away from a product they may not have much of, and instead to one that has been overproduced. This could also be Microsoft's way of getting ahead. Maybe there is a new product release in their plans, and they are trying to get ahead before the actual announcement.
I think the fact the microsoft only reduced the price of one type of xbox shows that the willingness to pay of consumers is still high for the other products. As Katie said above they may also need to reduce the price so consumers will be more willing to buy the product, and not focus on the other models.
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