History of Console Price Cuts and Why We're Due A Price Cut Soon

Next-Gen.biz has a 4 page article about price cuts, their effectiveness (like how well previous consoles have sold at various prices), and why we might be due for one really soon if history is any indication. I'll just post a few snippets:
http://www.next-gen.biz/index.php?option=com_content&task=view&id=5883&Itemid=2

More specific info on each platform at the link, including several graphs.

I hadn't realized that the 360 had kept its initial pricing as long as the PS2 (and will probably keep it longer). I thought maybe we'd be getting quicker price cuts this generation due to the higher initial prices, but maybe not. I wouldn't even be surprised if the 360 didn't get a price cut closer to July 2008 than July 2007, although hopefully it doesn't get that bad.

I've known about the importance of the $200 price tag, but it was nice to see some stats and figures about it. Sony and Microsoft (as well as third-party developers) better hope that $300 can be the new "magic" price, or else it might be a long time before those platforms go mainstream (especially if price cuts occur less frequently than in previous generations). On another note, I guess t

 

Microsoft has said it is permanent and not a limited edition, so go ahead and wait if you have to.

 

I'd guess this Fall at the earliest. They were supposed to have them ready by about this time, but last I heard, they were having some problems. I could see it not happening until next year actually, although hopefully that isn't the case.

I don't think they should have dropped it last year, but they probably should have dropped it early this year (instead, they increased the price ). Of course, I'm assuming they could even handle a price cut. Since they're still losing money on hardware apparently, it wouldn't have been an easy decision to price cut the hardware and lose even more, especially when they're determined to get the division out of the red. Makes me wonder if they'll even cut the price before the year is out.

I didn't really feel it was important to post a 13 month old trailer of MGS4 (although it is a much improved trailer). I was thinking about posting it in the random media thread by the end of the week though.

 

<200K systems sold per month is not really that healthy. Unless you compare it to PS3 sales of course.

They probably should be making at least a small profit off hardware at this point, but they're not for some reason (as of their last financial quarter anyway). Not sure if maybe something went wrong along the cost-cutting curve or what.

I don't know what their situation is, but keep in mind how costly a price cut could be for them if they're not quite ready for one (no 65nm, not breaking even yet at $400, etc.), especially if they put in a price cut right before the holidays (losses per console are at their highest while consoles sold per month are also at their highest). Obviously Halo 3 sales will help A LOT, but this move may not help them get out of the red. And as I said, Microsoft is getting tired of this division not producing any profits and desperately wants them to be out of the red in the next FY (ending in June of next year IIRC). Maybe that's just talk though, and they'll let them lose another $300M or so per quarter. They might be more lenient given the situation at hand, although I guess they may not be so sure this would be that effective (a price cut may have little effect in Japan and possibly Europe, meaning that it may not help marketshare that much anyway).

I'm pretty sure they will cut the price before the holidays (and be ready for it). Just mentioning how things could go wrong for them if they did do so.

 

Looks like Microsoft read the article:

http://www.gamesindustry.biz/content_page.php?aid=25625

 

Yeah, the PS3's not going to be approaching the "sweet spot" anytime soon. Closest they'll get this Fall would be if they cut the price $100 and brought back the 20GB PS3 (so $400). That might attract attention from some gamers that have waited for a sub-$400 PS3 (like myself), but I don't think they'll be getting Wii-like sales at that point. It might be possible to cut the price more (say $150-$200), but I don't there's anyway they'd drop the price that quickly. Better to cut in once this year, and then again sometime next year when sales die down (again).

Sony does seem to have an advantage when it comes to cutting costs, but it is way too early for that to really have an impact, and probably won't be much of factor unless Microsoft makes few mistakes of their own...it would only help to keep things "close." They'd be doing good (actually better than good) if they can keep the price difference to around $100 (maybe as low as $50 too), in which case they should also try and push any cost savings the PS3 might offer to make the extra cash seem worth it. That would actually require some good PR and marketing from Sony though...so they're screwed.