Call Me An Analyst – What Lies Ahead?

What Lies Ahead - Pricing

I predict that Microsoft will lower the cost of its Xbox 360 by $30 – $100 here in North America in what will mark their most aggressive move in the console race thus far.  The pricing strategy of Microsoft and its Xbox 360 have confused many in the industry.  The Xbox 360 was the first out of the gate yet pricing, in line with reduced manufacturing costs, has not been what you’d expect in a normal console cycle.  There doesn’t seem to be any type of general strategy which has resulted in different cuts at different times and different amounts.  This confusion doesn’t appear likely to change but as I predict, the next round of adjustments will be the catalyst that Microsoft needs to create an interesting end to 2008.

Xbox 360 Elite

Rumors of new chipsets to even further reduce manufacturing costs are paving the way for this.  Plans of this should surface around E3 or perhaps later towards the Tokyo Games Show.  It’s been nearly a year since the last US price drop and not even 6 months since a drop in Canada.  I don’t think Microsoft risks yet another holiday season without a more consumer friendly price especially considering the Xbox 360 will celebrate its 3-year anniversary in November and especially considering they’re not taking a loss anymore in that division.

Currently the Xbox 360 has 3 skus; Arcade, Pro and Elite.  In one last attempt to best Nintendo’s Wii, Microsoft will announce a $249.99 price for the Xbox 360 Arcade and will cause quite the stir by including a hard drive.  With the increase in Xbox Live Arcade size and the push for HD content, the Arcade sku has been long overdue and I suspect that will happen soon.

“You’re going to continue to see technical innovation, it might be additional capabilities to the current format – but honestly we haven’t made those kind of decisions yet,” said Microsoft Game Studios’ Shane Kim in an interview with CVG.

In order to stretch the 7 years out of the Xbox 360 as Shane Kim eluded to, all Xbox 360 versions will need to incorporate the hard drive allowing developers to maximize the console’s ability.  The Xbox 360 Pro and Elite will be moved to $299.99 US and $349.99 US respectively.  With the addition of a hard drive to the Arcade, Microsoft will opt to increase the size of the hard drive on its Pro console.  While the Elite won’t see a change in its 120 gig offering, the Xbox 360 Pro will see an increase in its hard drive from 20 gigs to 60 gigs.

Nintendo Wii

Nintendo will opt not to decrease the price of the Nintendo Wii in response to Microsoft’s lower Arcade sku.  Since launching in November 2006, the Nintendo Wii has been outselling its rivals handily.  Because of this, I see no reason or motivation for Nintendo to adjust the price of its console.

What may come as a surprise to many is that not even Sony will react to Microsoft’s new pricing strategy this year.  Sony has made strides to address manufacturing costs and they even expect to turn a profit on the PS3 in early 2009 despite my belief that it won’t.  Having to carry the weight of Blu-ray puts them in an unfortunate situation.  I expect a continued focus on highlighting the fact that they’re “built for the future”.  It’ll be their tagline when talking about price drops and why they’ll elect not to follow suit with any drastic cuts to the PlayStation 3 in North America.

PlayStation 3

You can even point to the release of Konami’s Metal Gear Solid 4 as more of reason Sony will opt not to make price adjustments.  They’re willing to see how the PS3 will perform post-MGS4 without any price cuts.  If things aren’t going well, expect Sony to move quickly with a price drop.

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About the Author

They call me "The Velvet Voice". I'm a Microsoft Xbox MVP and Author of the Day 8 New Human War book series on Amazon.com. I like sunshine, games and large amounts of money. You can follow me on Twitter @deaconblade. Take a look at my About Me Bio for more on what I do.

22 Responses to “ Call Me An Analyst – What Lies Ahead? ”

  1. another great article Deacon. your analyzing was a treat to read. :)

    hope most of it comes true…especially the hard drive thing.

  2. How awesome would this conversation be…

    Person 1: So what do you do for a living?
    Me: I get paid to predict the future!

  3. well i’ll glady accept payment for my awesome analyzing skillz :)

  4. Very apt observations, I’d be more inclined to follow your predictions than the “professional analysts” we’ve been hearing from lately.

  5. there’s nothing professional about these analysts these days. they pull crap out of their ass and surprisingly get paid for it.

    hey if you can do the same, go for it Deacon! like Intangible, i’d follow your predictions moreso than the other idiots.

  6. ya know. this is really good Deacon. better than the stuff i’ve ready from actual “pro analysts”. no kissing ass, this is really a good write up of predictions sir.

  7. Interesting read, DB.

    Hmm, I’m curious though on what Nintendo plans to do (if anything); as far as storage space for Wii-users, especially w/ more DLC being available on the Virtual Store.

    And I hope Killer Instinct makes a comeback on the 360: “C-C-C-Combobreaker!!!” W00t5! :D

    P.S. – You didn’t mention anything about your [beloved] PSP nor the DS, DB. :P

  8. yeah i left it strictly to speculate on the consoles. i didn’t want to go the handheld route :) i need a PSP Slim.

  9. I know what lies ahead for Sony.

    More lies.

  10. “You can still send me harassing messages about how wrong I am”

    lol, oh Deac… Where do I start?

    Well before I forget, you forgot to mention Fable 2 as one of 360′s big sequels this year… It may not live up to it’s hype, but It will sell over a Million easily.

    To the Wii… It’s sales will not fall off until a good long while from now (Late 2009) because the masses want it (No, not every home that has a Wii has either a 360/Ps3)… Even Young/Old/middle aged men & Women are buying them up for themselves & girlfriends such as my own are wanting it by hearing from her friends about how FUN the Wii really is. The Wii is a phenomenon that will steamroll everyone & that will cause Devs to start focusing on the Wii.

    To the Ps3 & 360… You forgot something very important when talking about the Ps3, & that is the Blu-Ray advantage when comparing price to the 360 that makes it only $50 more. The MGS4 game & bundle will help the Ps3 sell better than the 360 (Everywhere) during the month of it’s release (June) & I see the Ps3 selling better than the 360 here on out until Microsoft decides to price cut the 360. However, if Microsoft only reduces the 360′s price by -$50, it will be a short lived victory in sales in the following months. The Ps3 has more to it than just games because of Blu-Ray (As the HDTV adoption rate continues to climb, so will Blu-Ray) & Sony’s 1st party devs far outshines Microsoft’s 1st party. The Ps3 will keep looking better & better, while the 360 continues to spiral down because of many factors (Oldest on the market/Weak 1st party/RRoD is commonly known to sway people in favor of the Ps3/Can’t own HD DLC Movies/No Blu-Ray/Close Price) The 360 doesn’t have much in the way of new & exciting to bring in new buyers (Hardcore sequels will not do it)… They’ll sell Millions of games to the fans, but won’t sell many consoles to the casual public = They know Sony from Last Gen, & are getting the Wii first this Gen. Price & known quality could sway them, but will Microsoft make the right moves… I doubt it. If Sony lowers the price of the Ps3 by FALL 08 & promotes LittleBigPlanet with the likes of the upcoming games in 09 like God of War 3/Final Fantasy XIII/Gran Turismo 5/Team ICO game/Twisted Metal ?, Microsoft will have nothing to combat that for the masses who love those games & loved them on the 100 Million+ selling Ps2.

    Wii = #1
    PS3 = #2
    360 = #3

    By 2010

  11. Fable 2 won’t sway the masses like you believe. and 2010? this is just a few months prediction ;)

    i am the Zen master! you will see this! lol

  12. Deac, I never said Fable 2 will sway the masses… I said it will easily sell over a million because of all the Hardcore gamers that have a 360. ZERO of Microsoft’s big sequel games will sway the masses = They are all hardcore & Viva Pinata 2 doesn’t have mass appeal.

    Microsoft has no chance, while Sony does with the games I listed.

  13. Fable 2 is gunna rock woot woot! and GoW2. and maybe huxley if that ever decides to be released?

  14. Huxley is going the way of Alan Wake it seems.

  15. Woa, friend, a true gem with your analysis. Too bad some “analyst” never show the true reasoning for posting charts and trends based on who knows what.

    I would like to add the following:
    * Right on the HD issue, but I really hope that after covering the DRM problems, Microsoft can give us old 360 owners a way to upgrade our hard drives, maybe lowering the price on their current offer, or as I told you before, allowing a USB additional drive to be connected to the system, with all functions enabled
    * I bet for sure, just as the guys on 360 Fanboy, that the 360 will get to the $250 price way long before the PS3 does
    * On the networking side we have the edge. MS just need to organize and clean up the Marketplace even more so we can truly enjoy the experience (no more region locks, previews and pictures of ALL content available, etc.)
    * I also don’t see anything on the PS3 and Wii radar for the rest of the year that can really stop our wave (Haze killing Halo? MGS besting Cliff and the Epic staff effort at GOW2?)

    I believe we will have a shining end of the year just as 2007, and even more we can count on the following:
    * Nintendo will keep ahead of us as they put their bet on the casual gamer and non-gamers with their approach
    * Sony has been, is and will continue being too proud to accept the fact they’re on the loosing end and need to change tactics INMEDIATELY!!! (which they won’t do, as we know it already)

    Wonder if other Blue-ray companies will finally accept that they are loosing money by keeping the PS3 as the cheapiest player in the market, and finally lower their prices. If that happens, Sony would have won the blue-ray war just to see the PS3 being killed by the same reason.

    Take care.-

  16. [...] “The big surprise is that Sony will move more hardware than the Xbox 360 initially following the release of Grand Theft Auto IV.” – Call Me An Analyst [...]

  17. @Tyrone Hawk – ditto on Blu-ray and death to PS3. I’m holding out for a stand alone Blu-ray, I don’t see getting a PS3 really. I’ll have a Wii by the end of the year I think. Its different types of gaming, the Wii is really good for family stuff. I’ve already seen my mother-in-law & father-in-law play the Wii and have a blast and wouldn’t see them do that with the 360, just not the same type of games or appeal to them. My daughter likes both systems.

    Fable 2, Halo Wars, and Gears of War 2 are high on my list for the rest of the year. I’ve never play GoW and I’ll more an likely look at getting that now as well. Viva Pinata 2, I can’t forget that title, its a given my daughter is going to want that too.

  18. Great job of speculating

  19. well just know that you heard it all here first when this stuff plays out. and all these sites and so called “analysts” simply followed what i’ve already predicted.

  20. all the rumors going around looks like you played analyst pretty damn good DB. :) you were spot on it seems.

  21. [...] curious to know what everyone is expecting.  I’ve already predicted a price cut and the introduction of a new Xbox 360 60GB Sku.  Yes, I’m an analyst like that.  In your face Pachter!  I’m excited about the [...]

  22. [...] “While the Elite won’t see a change in its 120 gig offering, the Xbox 360 Pro will see an increase in its hard drive from 20 gigs to 60 gigs.” – Call Me An Analyst, U360 [...]

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