Xbox 360 price slash as Microsoft shifts consumer focus from Wii

by Stevie Smith - Sep 4 2008, 13:00

Microsoft Corp. has followed through with its much-talked about intention to strike the coveted videogame consumer ‘sweet spot’ by being the first hardware player this generation to offer a sub-$200 USD home console at retail.

Due to hit stores from tomorrow (Friday, Sept. 05), the base Arcade model of Microsoft’s popular Xbox 360 console will be sporting the reduced price point of $199 USD, which marks an aggressive market stance against rival formats on offer from both Sony Corp. and Nintendo.

Notably, Microsoft’s price action slashes a solid $80 USD off the previous $279 USD price of its cheapest Xbox 360 model, making it the first console this generation to drop below $200 USD and undercutting Nintendo’s market-leading Wii by a full $50 USD.

It remains to be seen whether Nintendo will now apply its own price reduction to counter Microsoft’s posturing in order to reinforce its ethos of providing consumers with quality gaming alongside value for money. The Nintendo Wii has not dropped from $250 USD since it launched in November of 2006.

Looking to put further pressure on main market rival Sony Corp. and its expensive line of PlayStation 3 consoles, Microsoft is also reducing the price of its 60GB Pro (a.k.a. Premium) and 120GB Elite models, with the Pro dropping from $349 USD to $299 USD, and the Elite shifting from $450 USD to $399 USD.

As of tomorrow’s official retail adjustment, Sony Corp. will be a cavernous $100 USD behind Microsoft in the pricing of its own base PlayStation 3. However, it should be noted that Sony’s lowest priced console comes complete with a 40GB hard drive and a Blu-ray player, while the Xbox 360 Arcade has no onboard HD function or a hard drive out-of-the-box.

In terms of the potential business benefits associated with Microsoft’s price drop, the software titan has previously claimed that, historically, the first gaming hardware manufacturer to fall into the sub-$200 pricing category usually wins that particular generation battle.

Also, Aaron Greenberg, Microsoft’s director of product management for Xbox 360 and Xbox Live, has said history shows that three-quarters of sales for game consoles occur after hardware makers drop the prices of their machines below the $200 USD mark.

“We know there’s a large audience of consumers who don’t get into the game until you reach that $200 price point,” said Greenberg.

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