Analysts tip 2007 for Xbox 360 price cut

November 28th, 2006, 17:15 Posted By: wraggster

Microsoft will follow Sony's lead rather than surprising us all with a 360 price cut

1 CommentsSpeaking in an interview published yesterday, Microsoft's Robbie Bach said that manufacturing costs of the Xbox 360 have come down significantly, making a price cut for the console a viable option. The only question is when.

Next-gen.biz gathered some of the industry's leading analysts for their opinion on when MS will shave the pennies off of its next-gen console, and concluded that it will likely follow Sony's lead, rather than surprise us all with a price cut.

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"Notwithstanding Robbie's comments to the contrary, Microsoft is not a charity, and they won't cut price just because they can," said Michael Pachter of Wedbush Morgan Securities. "Rather, I think Microsoft is a price taker, and they will cut only when Sony does."

He adds, "And I don't think we will see a cut from Sony in the conventional sense during 2007. Instead, I think that they may add wi-fi to the 20Gb model and keep it at $499. Microsoft might then cut, but probably not below $349."

When it launched, each Xbox 360 cost Microsoft $525 USD (£270 GBP) to produce, but iSuppli estimates that today the premium console costs only $323 USD (£166 GBP) to create, leaving potential margin for a price cut.

Next-Gen speculates with all the money lost from the original Xbox, Microsoft would ultimately opt for profitibality over position as market leader.

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