$100 Component-Driven 360 Cut Denied by Microsoft

Taiwanese manufacturing lets slip?

Posted by Staff
$100 Component-Driven 360 Cut Denied by Microsoft
Taiwanese component manufacturers have briefed press sources in the country that they expect Microsoft to offer its Xbox 360 at $100 less across the world in the coming months, a move that spurred Microsoft to deny any price cut was planned.

"Microsoft is planning to cut the retail price of its Xbox 360 Pro System from US$399 currently to US$299 in an attempt to compete with the PlayStation 3 (PS3), which will be launched by Sony in November of this year, according to Taiwan-based OEM component makers," reported the DigiTimes following the purported leak earlier this week.

The report continued: "Microsoft, to prepare for the price cut, has negotiated reduced production costs for the Xbox 360 with Taiwan-based manufacturing partners, stated the sources. The manufacturers estimate that the total production cost can be reduced by 15-20% due to diminishing costs for most components along with increasing production scales and decreasing defect rates, the sources pointed out. Considering Sony will sell a 20GB HDD (hard disk drive) and 60GB HDD PS3, each with a built-in blue-laser Blu-ray Disc drive, for US$499 and US$599, respectively, Microsoft plans to maximize the price competitiveness of its Xbox 360 Pro System by dropping prices so that the model can be equipped with an external HD-DVD drive in the future for under US$399, the sources indicated."

So is it true? It certainly makes sense and of course, the rumour of a $100 price drop to see off the PlayStation 3 is as old as the hills. Peter Moore, speaking to us in recent weeks, debunked the rumour saying, "We're all feeling pretty comfortable with where we're at right now. I'm not sure why we'd change it. Sony gave us a price drop at E3. Obviously we don't talk about pricing [openly] and stuff happens but we have no plans to cut the price right now. ...we're very happy with things as they stand."

Microsoft in the US has refused to comment on the rumour, though its Taiwanese arm went on the record to say it was misinformation circulating.

Given the well-respected smoke and fire equation, we'll keep an eye on these smoldering embers and report back if we hear anything more.
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Comments

DoctorDee 28 Jul 2006 07:37
1/2
The thing is - Microsoft has a choice. If PS3 sales hit 360 sales, then they can price cut. If they don't they can make extra, and much needed, profit. Much needed profit for the Xbox division, not for Microsoft as a whole, obviously.

I think they will wait and see.
thane_jaw 28 Jul 2006 10:32
2/2
I can't see them making any price cuts until early next year. In the light of the ps3 price announcement and the frenzied desire for the 360 last year they could probably have got away with a higher initial price. Reducing their profits (well increasing the loss) on something that will continue to sell reasonably well this year and probably comparatively to the ps3 at xmas doesn't make sense.
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