NEWS - Wednesday, January 28, 2004


Xbox for $99? Xbox 2 in 2005?

Microsoft’s Xbox may be on the verge of a substantial price cut, falling from $179 to $99 by Labor Day, according to P.J. McNealy, an analyst with American Technology Research. "It is our belief that the price on the consoles in North America could see a stepped drop this year, with both the PS2 and Xbox being cut to $129 between now and the May E3 trade show, with [Microsoft] then cutting the Xbox further to $99 in the late summer," he wrote in a research note released Wednesday. McNealy also believes Microsoft will launch its next generation console in late 2005 – a year earlier than has been previously rumored. That would put the Xbox 2 on store shelves up to a full year before Sony’s PlayStation 3. Microsoft, when asked about the report, said it does not comment on rumors and speculation. The predictions are pretty bold – but not without merit. It’s no mystery that the price of home video game machines will be coming down this year. After 2003’s lackluster $20 cuts, Microsoft and Sony both saw console sales falter. Xbox hardware sales fell 18 percent in North America between 2002 and 2003. PlayStation 2 sales were off 49 percent in Holiday 2003. (Only Nintendo, which dropped GameCube prices to $99, saw sales increase.) The price cut would result in a flood of red ink, though. When Microsoft launched the Xbox in 2001 for $299, it reportedly lost $100 for every unit it sold. Component prices have certainly gone down since then, but the console has never reached the break-even point. But at this stage of the game (so to speak), Microsoft doesn’t seem to care much about that. Deep price cuts – especially if they go unmatched by Sony – would drive up the number of people who own and begin growing accustomed to the Xbox. And having that deep installed customer base is the key to driving sales of a next generation machine. So $99 would certainly build brand awareness as Microsoft prepares for the launch of its next machine. But I’m not sure a 2005 launch is necessarily a good move. Yes, being the first to market would let Microsoft do away with that reputation it has as a follower. It might also force Sony to either step up production of the PS3 or increase the technical specs. But showing your hand a year before the industry’s 500 lb. gorilla does carries a significant amount of risk. Just ask Sega, which tried doing that with the Dreamcast – and got booted from the hardware business as a result. Gamers looked at what the Dreamcast could do and were generally impressed – but decided to save their dollars for the PS2, since they considered it a sure bet. Microsoft, certainly, is in a much stronger position than Sega. The Xbox’s buzz factor is on the rise – and will soar higher if the company opts for a $99 price tag. But it hasn’t yet established a reputation that’s strong enough for it to sway Sony loyalists. (Not to mention there’s a fringe faction that refuses to buy the machine simply because it’s made by Microsoft.) Certainly, it could hurt Sony during the crucial holiday sales period – both 2004 (with Microsoft offering a lower price point) and 2005 (with Microsoft offering a state-of-the-art product). But a rush to market could give Sony time to wind up for a devastating punch. Look at the software situation. "Halo 2" – the second installment of the most popular Xbox game (by far) – is due later this year. Exactly when is a mystery – Microsoft will only offer "it will be ready when it’s ready". It’s possible we won’t see the game until this holiday season. That would leave an insufficient amount of time to prepare another installment to launch in conjunction with Xbox 2. Obviously, it’s not essential that the system launch with its best game. And an argument could be made that holding "Halo 3" to meet the PS3 launch head on might be wise. But the Xbox has so far been unable to deliver another game line that is anywhere near as effective at moving hardware. All Sony (SNE: Research, Estimates) needs to do is announce that a new "Grand Theft Auto" title – and perhaps a new "Jak" or "Ratchet and Clank" game – will launch simultaneously with the PS3 and it could suck the wind out of Microsoft’s (MSFT: Research, Estimates) sails. And the nightmare scenario in Redmond has to be releasing the Xbox 2 a year early – only to have it move off shelves at a lackluster pace.
Source: http://money.cnn.com

Site Statistics

Registered Members: 52,576
Forum Posts: 725,929
Xbox One Titles: 3,753
Xbox 360 Titles: 1,086
Xbox 360 Kinect Titles: 95
Xbox 360 Arcade Titles: 586
Original Xbox Titles: 987
Staff Reviews: 2,194
Member Reviews: 10,339
News Articles: 16,134
Screenshots: 35,479
Xbox 360 Achievements: 45,112
Xbox 360 Faceplates: 2,016
Cheat Codes: 1,706

Latest News





Hermitage: Strange Case Files Out Now

Hermitage: Strange Case Files Out NowHermitage isn’t your ordinary book shop. If customers are purely looking for something to read, they won’t find that here. From Japanese folklore to superstitious tales from Southeast Asia, the books on offer here are colourful as its clientele.




See News Archives

Community Forum Activity

2021: XBA is still here
Post by shrew king
3 Replies, 17727 Views

Watch Dogs: Legion
Post by Nato King
0 Replies, 34179 Views

Xbox Series X or S
Post by Nato King
5 Replies, 47403 Views

Spellbreak Grand Magus Pack (3) and Starter Pack (7) Giveaway!
Post by Variation-XBA
0 Replies, 39919 Views

I pay $ 1000! I search the Element 54 Canadian launch Team signaturen Faceplate
Post by Smill
0 Replies, 40350 Views

Xbox one no signal
Post by debrartin
0 Replies, 57072 Views

do you remember?
Post by SnoochyBoochy
3 Replies, 59334 Views

i haz xbox
Post by SnoochyBoochy
0 Replies, 51253 Views

Claiming the first thread of 2020
Post by Kraft
7 Replies, 83749 Views

Important! I pay $ 1000! I search the Sweden launch and the Element 54 Faceplate
Post by Smill
3 Replies, 43211 Views

Squad Up
Post by samslophead
0 Replies, 94347 Views

TERA Skinned Xbox One X Giveaway!
Post by Variation-XBA
0 Replies, 69039 Views

Starfield Release expectations?
Post by DJ tx
4 Replies, 129788 Views

Issue with Xbox live on Xbox home
Post by rcmpayne
0 Replies, 88338 Views

Happy Birthday, Me.
Post by SnoochyBoochy
4 Replies, 109671 Views

© 2000-2021 XboxAddict.com - All rights reserved. All trademarks are properties of their respective owners.
Xbox is a registered trademark of Microsoft. XboxAddict.com is not affiliated with Microsoft.

Made in Canada
Site Design by Cameron Graphics