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Analyst: Xbox 360 Price Cut Won't Spur Reductions For Wii, PS3
Analyst: Xbox 360 Price Cut Won't Spur Reductions For Wii, PS3 Exclusive
September 4, 2008 | By Leigh Alexander

September 4, 2008 | By Leigh Alexander
More: Console/PC, Exclusive

Microsoft's recent price reduction across the board on all of its Xbox 360 SKUs -- with the lowest-end Arcade model now less expensive than the Wii -- helps trend hardware price points into an "inflection point."

Lazard Capital Markets analyst Colin Sebastian explains that analysis of historical console sales shows that when hardware prices dip below the $200 point, it tends to foreshadow a growth in sales to a mass market audience.

"In addition, given the weaker consumer spending environment, the Xbox 360 should also now be in closer reach of more price-sensitive consumers," he says. Not surprisingly, he predicts Xbox 360 sales to accelerate in the upcoming Fall and Holiday season.

But what about the competing consoles? "At this point, we do not anticipate either Nintendo or Sony to match the Xbox 360 price cut," says Sebastian, citing continuing Wii supply constraints and past remarks by Sony that PlayStation 3 price cuts won't happen this year.

The price reduction for Xbox 360 could also boost sales of Guitar Hero and Rock Band in particular, says Sebastian, standouts in what may turn out to be an overall boost in sales of industry software and hardware both as a result of Microsoft's decision, which he calls "good news" for the entire industry."

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Dick Plaus
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I disagree. The sales will increase because it's Christmas buying season for all consoles, but Microsoft will chip some sales off of the PS3. When parents go to buy their kid a console, they will probably either pick a Wii... or one of the PS3/Xbox. When the Xbox is 100 or more cheaper than a PS3, I think the choice is obvious.

Geoffrey Mackey
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The big question is will the Wii have a supply this Xmas? So far it sounds like they won't. If that's the case the Xbox could really catch fire.

Steve Amodio
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I don't think there's any chance of MS making headway on Nintendo, even with the expected supply constraint. At this point, the brand recognition and disparity is so strong that parents aren't going into stores to buy "a video game system" for their kid, they're going into stores for the Wii. Also as Iwata noted, the way the Wii is racking up such impressive numbers is by selling through year round, as opposed to just being a holiday item. Nintendo's release schedule in '08 reflected that.

Matt Ponton
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@ Geoffrey Mackey

Ha, I see what you did there.