Analysts endorse 360 price drops

Industry watchers agree that Microsoft stands to regain ground thanks to cross-SKU cuts, with Nintendo and Sony unlikely to counter.

170 Comments

Yesterday, Microsoft officially confirmed that the long-rumored Xbox 360 price drop first announced in Japan would extend to North American gamers as well. As of September 5, Microsoft's Elite 120GB Xbox 360 SKU will drop $80 to $399, with the 60GB Pro and the hard-drive-less Arcade following in line at respective $100 intervals. The latter SKU is of particular note, as it will effectively give Microsoft the cheapest current-gen console on the market--$50 less than current market leader, the Nintendo Wii.

The price drop is sure to have an impact on the gaming industry, but just how much has yet to be seen. If there's anything that industry watchers seem to be in agreement upon, it's that the cut will shift momentum back into Microsoft's corner and that Sony and Nintendo aren't likely to counter the potentially game-changing move with price cuts of their own.

Electronic Entertainment Design and Research analyst Jesse Divnich told GameSpot that Microsoft's $199 SKU puts the company in prime position to halt Sony's surging PlayStation 3. "Microsoft has the industry's best exclusive licenses, such as Halo, Gears of War, and Fable," noted Divnich. "In terms of software, Sony has Resistance and LittleBigPlanet, which can't compare to Gears and Fable 2. So with Microsoft beating Sony on pricing, beating them on library, and beating them on services with Xbox Live, the price cut should shift momentum back to the 360," asserted Divnich.

The EEDR analyst also believes that Microsoft has a lot riding on this drop, especially if it doesn't spark momentum. He cautioned, "It may force them to release hardware before they plan. We probably won't see next-gen [consoles] until 2012, but if this plan fails, they may be forced to release in 2011."

With Sony reiterating on several occasions that the PlayStation 3's price will remain fixed in 2008, Divnich joined a chorus of other industry analysts in saying that Microsoft's archrival isn't likely to respond. "Sony has been adamant for the last six months about maintaining its price point," noted Divnich. "This is risky, but Sony just isn't where they need to be in terms of manufacturing efficiency to drop price."

Echoing Divnich's sentiments, USB Ben Schachter noted, "We believe any cut from Microsoft aims to slow Sony's momentum before first-party PS3 releases in [the second half of 2008] such as LittleBigPlanet, Resistance 2, SOCOM, and others...Sony is unlikely to cut in response, though, in the unlikely event that PS3 sales significantly slow, Sony might have to reassess."

Stating that he also expects Sony and Nintendo to stick to their guns, Lazard Capital Markets' Colin Sebastian turned to what Microsoft stands to gain from broaching the $200 threshold. "Our analysis of historical console sales in the U.S. suggests that price points below $200 can be an inflection point in sales, with appeal to a mass market audience," observed Sebastian. The analyst then demonstrated via bar graph that the PlayStation 2 had its best single-year performance after Sony reduced the console's North American price to $199 in May 2002, helping rack up nearly 12 million system sales for the year.

Wedbush Morgan analyst Michael Pachter believes Microsoft stands to see as much as a 20 percent bump in hardware sales this holiday season as a result of the price cut, assuming the hardware maker markets the drop effectively. "They are certainly going for a piece of the mass market, and seem to have focused on the Arcade model as the central SKU," he observed.

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gamer082009

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Whether they endorse it or not I think it's clear that the Xbox 360 is going to slaughter the PS3 in sales. Breaking the $200 price barrier is the best thing any console company can do. I think you're going to see sales shoot through the roof and stay there for quite some time. Give it enough time to sit in the big retailer stores like Wal-mart and Bestbuy with that $199 price tag and you'll see just how fast they'll start moving Xbox 360's.

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_JPH_

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The title here is "Analysts endorse 360 price drops." If fanboys want to fight here, at least say why or why not this will boost 360 sales. Do not come here and say why the PS3 is better or the 360 is better. WTF IS WRONG WITH U GUYZ???

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TheArcade

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Wow Darkride66 you are late hardly anyone else is here. lol Why is it your post is so one-sided and half opinionated? Nobody seems to care about which company has the most offerings with the exception of a select few, yourself included. It's pointless of you to become Sony's professional suck up because people can care less about the strength and weaknesses of both the PS3 and Xbox 360. Judging by the looks of it that's all you care about. Good luck with trying to change the publics opinion of the evil Xbox 360. Hey how about this since you insist on always taking Sony's side I'll just copy your patterns but instead of defending Sony I will defend Panasonic. The 3DO is better than PS3 and Xbox 360. :p Why? Because I think the name sounds cooler and no analysts or metacritic can tell me otherwise. Metacritic confirms they know everything about nothing.

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darkride66

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@ Phatjam98. Wow. I have to respectfully disagree with, well, everything you just posted. First off, yes, you can beat XBL. After I spent years of forking out cash to Microsoft for XBL (which was great 5 years ago) Sony now has a similar offering and it's free. It took Sony a couple of updates but now it there, and MS's plan to fight it is Mii's. How you stop charging people subscription fees to play 100% of the game they just bought? The 360 is the cheapest multimedia experience? Tell that to those of us who've been forking out for XBL for the past 3 years. Or those who forked out hundreds for a HD-DVD add on. As for Sony fans thinking loyalty would outweigh game library, excuse me? The PS3 has been releasing games just as fast as the 360 did from it's launch, there's no difference. And a quick check of reviews on metacritic confirms that, as a total percentage of games released, PS3 games average higher ratings. Look it up yourself. You talk about developers who were happy to make games for Sony last time around, of course they were. They were making games for an installed user base of over 100 million. This certainly isn't rocket science. Now multiconsole games are more the trend because games are more expensive to make and neither installed user base can touch yet what the PS2 had before. This has zero to do with Sony's "strong arm tactics" and everything to do with the almighty dollar. And as for the companies using the same business tactics? Funny, I don't recall Sony every being charged and fined for anti competitive business practices. MS on the other hand have been found guilty over and over again, flaunting fair business practices the world over. I've got nothing against the 360, own one myself and I'm on my 3rd one. I can't wait for Fable 2 and Gear 2 but I can't see how anyone could agree with a single point you make.

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Phatjam98

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Wow, you guys are silly. I'm not sure but I know a ton of people personally that have 360's. I know a few people that own PS3's too. But the people that own the PS3's either also have a 360, or they are not serious gamers and got it for GTA IV and the Blueray cause it was cheaper. No matter what anyone says, you simply cant beat Xbox Live and that makes 360 the winner without adding anything else. And after the new November update/reinvention the game is totally over as it will be the cheapest Multimedia experiance around with a kick ass gaming system included. Sorry PS fans, your boys at sony were really the arrogant ones. They thought fanboy loyalty would outweigh Game library issues as they lost all kinds of exclusives to both nintendo and MS. Ask the developers that were oh so happy to work for sony exclusivly during the last gen why they defected this time around. 1. More money with a wider audiaunce 2. Sony pissed everyone off with their weak offers and strongarm tactics. Sounds like what we have heard about MS for all these years! PEOPLE SONY IS MS WITH A DIFFERANT NAME!!!! THEY ARE BOTH MASSIVE COMPANYS THAT DO WHAT THEY HAVE TO DO TO REMAIN MASSIVE COMPANYS!!!!!! THEY ARE BOTH EVIL EMPIRES, AND THEY BOTH USE THE SAME BUISNESS TACTICS!!!! So pick the system that has the best games and features for your taste and stop with the finger pointing as they are EXACTLY THE SAME COMPANY!!!!!!

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thekodaman

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A new Sega console? Highly doubtful seeing as the console market is set to be highly competitive for the next few years - an unforgiving climate for a new console, there's also the fact that Sega have been allowing their former I.P's onto other consoles this generation and lastly they just don't have the necessary funds to develop a console anymore. So effectively they have nothing going for them in the software, hardware and financial departments for developing a new console.

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LindBergh2007

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TheArcade, Sega IS rumored to be working on a another console.

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TheArcade

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Then all hope is lost...

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YoJim8obaJoe

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While I agree with TheArcade that sega should make a new console,I doubt it will happen.

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tawagivercetti

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onya m$

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TheArcade

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*sighs* I wish Sega would get themselves back into the hardware race. (._.)

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LindBergh2007

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In total hindsight, out of all the gaming headlines this summer the 360 price cut has the most interesting ring to it. The 360 price cut will do two things: One: it will help increase Mircosoft's profits because they don't lose money on 360 like they did with Xbox(that's why it was built underpowered) Two: it puts a serious dent in Wii sales. But there's a whole catch to this. The price cut comes with the fact that most console manufacturers are price fixing thier consoles and Mircosoft is the only one that's slashing the price of it's orignal model why? Because it's been out longer then PS3 and Wii. It also serves as a sad gut wrenching truth to Nintendo fanboys, the price cut will likely hurt western sales of Wii and the problem with it's assessories might become more of a problem than anyone ever anticpated. The price tag was a key major selling point for Wii and it looks like Nintendo just lost thier biggest draw. Both the price cut and stronger library will likely dethrone Wii. For PS3,it only serves to further more losses and raises the question: "If PS3 fails and Sony is forced to throw in the towel with hardware, will it leave an open spot for SEGA to re-enter the console market?" We shal see within the next year. Don't argue Sony fanboys that PS4 is on the horizon, because there is no PS4. Why? Because Sony spent way too much money on developing PS3 during a four year period close to about $6 billion. If there was a PS4, then they would have already abandoned PS2. In closing,development costs are still rising and the holiday season(the forcast for retailers isn't looking good) is key to whether or not the market will collapse. If it does, 360 and PS2 will still be around while Wii and PS3 will both be dead.

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TheArcade

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@The_Dude1212 It's not that I don't believe you but do you have any proof? A source as to where this came from?

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oskermayor

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@The Dude121 Have you played MGS4? I doubt that you have, for believing that Kojima is talking about brining MGS to Nintendo. There is no way that any form of MGS4 would make its way to the Wii. The game would have to be completely redesigned from the ground-up to have it run on Wii hardware. Financially, it just doesn't makes sense.

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The_Dude1212

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For the record, MGS ain't likely to be staying exclusive to the PS3. Kojima is in talks with Nintendo to bring down a cut down version of the game to the Wii. No idea what he has planned for the 360. Makes sense, though, Snake in SSBB, Music from MGS4 in SSBB before the actual Metal Gear game is released...

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XanderZane

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Well, it's not about the hardware, it's about the software and the XBox 360 has the PS3 and Wii beat on all accounts. Whether the PS3 has blu-ray or not will be irrelevant come November 28th when shopper hit every retail store in the world and find out the 360 is only $200 and has most of the same games the PS3 has, plus more quality titles to boot. There are a LOT of consumers who don't even pay much attention to the gaming industry until the holidays and those are the people who will be buying 360's. You have to figure, that most people are have a Wii by now, so even though we sales will be great, people who bought a Wii last x-Mas and didn't get a 360, will be getting one this X-Mas. -------------------------------------------------------------------------------- @twistedmalice They should put the pro model at $200. Then you will see how fast they fly of the shelves this winter. This is a good move by mircosoft. +++++++++++++++++++++++++++++++++++++++++ That will happen next year before X-Mas 2009. Arcade will be $150, Pro $200 and Elite $300. the 360 will probably have over 600 games for it by then.

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Grantsplace2004

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Orange, not to say ms is doing fantastic or anything but u do know that the ps3 costs sony about 700+ usd to make, both companies are bleeding cash, but at this point Msoft is the one who has the deeper pockets. (I'm not flaming the ps3 or anything just saying its expensive for sony to make, dont spam me like crazed console zealots)

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TheArcade

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lol I agree with you delcidanddarth.

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gnbfd

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Well this would be awesome but... the Wii for $50 comes with built in wifi, and built in (even if it's not big) flash memory. The memory it comes with should be able to last for a while, while the 256MB Mem. Card that comes with the arcade probably will only fit 1 or 2 downloadable games I can't really compare this with the PS3 though, but the point is that the Arcade is ****. It would be better, but M$ feels the need to overcharge for an HDD. The Wii has SD Cards (even if they are implemented horribly), and the PS3 has an HDD BUILT IN! Not only that, but you can change it to up to 320 (or 500. I forgot which) GB and they are not overpriced. They are the same kind that laptops use, and they are cheap compared to the 360 ones. I did almost buy this once though... but that's a different story. EDIT: I should also add the fact that unlike Sony, M$ is making profits off of their console, so props to them. If Sony would just get rid of the Cell chip. It's done them more bad than good.

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gnbfd

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[This message was deleted at the request of the original poster]

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Some_One_Plays

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To: BenBenBen93 What about games like Infamous, Killzone 2, or Resistance 2? Each time you enter in a certain area you must change discs?

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BenBenBen93

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oooy yer forgot i have an argument against Blu-ray if you want a gaming machine not for multimedia whats the point in Blu-ray in games blu ray make no difference because you can just put the huge games on an extra disk oh no not an extra disk that like crazy even though the price is exsacaly the same

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Some_One_Plays

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I don't think people realize that the Arcade model was always a lure for a chain reaction of money flow for Microsoft. Once you get the Arcade model and get the cheapest route for the basics it's equivalent to the 60GB model's price (CAN: $449.98 ). If you go the expensive route it will be equivalent to the Elite price or a little bit more (CAN: $574.96). People are just better of getting the other models and Sony / Nintendo don't need a price cut. Sony would need one when the Elite model is at $199.99 because the Arcade model is just striped. Plus there is more value in the PlayStation 3 console over the XBOX 360. You save at least $799.99 on a high-end Blu-ray player going with the PlayStation 3 and that's just for movies.

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BenBenBen93

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well this winter Xbox are putting a slightly modified chip sets and that should eliminate any 3 red lights people get randomly but remember PS3 will brake in the same way as 360 eg not right ventilation and generally hitting the console so hurray and i agree that Xbox will need to release it next gen console before ps3 simply because it dosn't have blu-ray (woo better exclusive games yey)

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akiwak

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@ marginalvalue I couldn't agree with you more: the 360 has a better failure rate than the ps3.... LOL thanks for agreeing that the 360 will continue to fail more than the PS3. hey it's your words. I personally also endorse the price drop because it also means that the other systems will go down in price. It's just not official yet.

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ftjx

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"In terms of software, Sony has Resistance and LittleBigPlanet,...." And...................AND! 'Metal Gear Solid4: Guns of the Patriots' you idots, how could you forget? jeeeeeesh some people......

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orange808

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@st1ka The Xbox division had a profit of over $400 million in the first part of this year. That was the first time the division had ever reported a profit. And, they just announced another price cut--that will create even more losses. Last year, they lost almost 2 billion dollars. Know your stuff before you post.

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marginalvalue

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for all you ps3 fanboys talking hardware you seem to have a real lack of knowledge on the hardware of both the 360 and ps3. the ability to natively display 1080p comes from the gpu the 360's gpu not only can produce 1080p natively but is a far more powerful gpu than the poor old gt 7800 based ps3 gpu which has a hell of a time just doing decent ani-alaising (sad but true).the ps3 will not and cannot do grpahics as well as the 360 due to its poor gpu (graphics processing unit) and bad memory layout, and will NEVER be able to match it... kinda sad for a system that costs twice as much... dont talk smack unless you know what your talking about. the 360 still has well over twice the installed base in the US (the most important market) with 12.27 mill compaired to 5.7 with the ps3.... THATS HUGE! oh and please stop the rrod bs thats been fixed for yrs and now the 360 has a better failure rate than the ps3 so if you really want good hardware dont buy a ps3 get a 360. by the way i have both but the ps3 sucks for games i use it to watch movies.

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excidiumx1

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Let's face it, the PS3 is a superior system hardware wise. But that's not what sells a console, it's the games. The PS2 was far weaker then the Xbox but yet it became #1 outselling the Xbox by a large margin. The Xbox 360 has a better library of games overall specially in the exclusive arena. Now with this new price drop sales are sure to increase. Specially during the holidays. Right now the only thing that is making the PS3 sell is the Blu-ray. Remember when Blue-ray became the next-gen format standard? The PS3 sales started to increase. If you remove the Blue-ray from the PS3 it will most likely cost $100 less. But I doubt it will sell as well as it is doing right now. Regardless if you are a fanboy or not... $200 for a next gen system is pretty sweet. Unless you don't like getting a good deal or the fanboyism is got you so blind that you can't see straight. In that case be careful as you might run into a wall or something.

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guma822

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of course i just bought a new 360 like a week ago. now i need to return to bestbuy and ask them to give me the better price

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delcidanddarth

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Fanboys... stop whining about price. The choice is pretty easy. If you like xbox games, get an xbox. If you want a bluray player and be able to play most of the same games, get a PS3. If you don't play games, then just get a bluray player. If all you want to do is play games... then get a Wii.

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scimitar4701

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OH yeah Microsoft has great service alright, doesn't matter how many times the 360 breaks, "just send it in and we'll fix it" cause that will give you a few weeks of regaining a social life. Take it from me, I'm not a "fanboy", I had a 360 until it breaks after less than 15 hrs of play. What I should have done was spend an extra $100 and get a superior system (PS3), which I did after Microsoft sent me a replacement unit because they couldn't fix the 360 that I sent them. But yeah, great customer service.

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Jackman1

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Lol I love all of you who are calling the analysts dumb. because you know so much more than them huh? why dont I see you guys being interviewed on this? oh wait...thats right...

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V-r0cK

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Not trying to cause a fight or anything but back when PS3 started spitting out diff SKUs on and off there were alot of Xbox360 fanboys saying how stupid Sony was and should just have one SKU etc. But clearly MS is the one that has multiple SKUs and plans to keep it this way. And it seems that the xbox fanboys dont mind it and praising how MS gives ppl options etc. Sony was doing the same yet cuz its Sony you just had to hate them. Back to topic, with the price cut im sure xbox360 is bound to see very well. im sure xbox360 will sell a killer this holiday with the 199$ arcade w/ GeoW2. i guess thatll be the equivalence of ps3 with Res2. Seeing as how PS3 sales are increasing it seems that not many ppl mind its price point as much anymore. Cant wait to see the outcome for this holiday.

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Pittfan666

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I'm still waiting for Sony to drop the price of their PS3 so that I can own both systems. The console is still $399 and is way to much money for me to invest in purchasing one. So I'd get to watch like a few Blu-Ray movies that are ridiculously priced compared to dvds that have prices equal and often less than audio cds today. I still can't see spending $399 for that, $350-$300 is a much more reasonable price considering I can't play PS2 games on the system anymore.

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twistedmalice

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They should put the pro model at $200. Then you will see how fast they fly of the shelves this winter. This is a good move by mircosoft.

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Vegeta-sama

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mtnjak... dude just because it doesn't use BR doesn't mean it isn't HD. I've been downloading and watching HD content on my 360 for some time now and eventually I think you'll find that BR will go the way of every other sony backed format when digital downloads become the prime way of getting your movies and games.

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helium_flash

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I think this price drop was a good idea. Hopefully eventually M$ will just get rid of the arcade when the Pro model goes to $200. Then I'll get one.

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Vegeta-sama

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enoslives7 you think maybe your opinion is a little biased? Microsoft's price drop comes at a time when they have brought the cost of the 360 down... just like the last time they dropped the price.

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mtnjak

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There's no need for Sony to counter with a lower price when there's no comparision. The PS3 is the true next gen console [period]. You don't have to be a "fanboy" to see the facts here. If you want a cheap non-HD gaming system, go with Xbox. If you want a next gen HD gaming and entertainment console all-in-one, go with PS3. Microsoft is making a mistake if they don't take the next logical step and get in the HD game with a blu-ray built in.

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Soupflakez

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ChaosXeno: A price cut, especially with a console that does have a good software library, is going to help boost momentum. Regardless of what you believe, it's a business strategy. I'm not sure if this is going to have any sort of significant impact on PS3 momentum (considering one of its major selling points is blu-ray), but it will shake things up a little. It makes the Arcade the cheapest next-gen console (with the benefit of HD..unlike the Wii). In the end, not one of us should even care about sales. We didn't buy our consoles to see how they fair against competition, we bought them to enjoy the software that's available.

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glhx1rush

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Works for me, I could use another Xbox. "Sony might have to reassess." - Works for me too, I will buy a P$3, If $ony drops the price. These price cuts will benefit all of us.

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mangojuiceboy

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All these fanboys are really annoying. So MS dropped the price of the 360, thats great for gamers who like it or want one. So the PS3 outsells the 360, why does that matter to anyone here? do any of you work for Sony? Also to all those so called PS3fanboys who complain about the 360. If the 360 wasn't around then the PS3 would still be priced at $499 and $599. Will the price drop help the sales of the 360, maybe not. I think the arcade is kind of pointless anyway (my opinion). I bought my 360 to play games and i also bought my PS3 to play games as well (and the fact that it's a Blu-Ray player is pretty cool). So please stop fighting about who's better and why. both systems are great.

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Zerosumgame

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Analysts also endorse the 360 rescue campaign.

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ignautius

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REPLY: That was the first XBOX. It was a project to see if they could make a dent into the video game industry. With losses from Sega Dreamcast, 3D0 (I owned one), Jaquar 64, Neo Geo, etc it was risky for them to try. They lost 3 billion trying to make a dent but a lot of that went the NVIDIA for the license on the videocard. However for 360, its been profitable for a long while, even on hardware. << LINK REMOVED >> Um... no. And, like I said before, you can thank Halo 3 for that. Get the facts next time.

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micmill

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That fanboy analyst cracked me up with his "Gears 2 and Fable are superior" stuff. Yes, Gears of War 2 will be huge and Fable will be big... but I think he severely underestimated how big Little Big Planet is going to be, and he left out mention of SOCOM which is hilarious. And oh by the way, I still know a lot of guys who plan on buying a PS3 for Christmas because they want to buy MGS4. Holiday lineup of Resistance 2, Little Big Planet, MGS4 and SOCOM is very strong.

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necronaux

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Of course Nintendo & Sony aren't going to follow. The DS is still at $129 and how long has it been out? The Game Cube, if you find it new, is still $99 and the GBA SP is still $79. WHY would they drop prices if people are still buying at these prices. AND, Sony's PS2 is still at $129.

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Yuck_Too

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Looks like Howard Stringer was right when we said that the PS3 would win Sony the Blu-ray format war and lose them the game console war. With the PS3 still not projected to break even on hardware production costs until the end of their fiscal year they simply cannot afford to lose any more money on the PS3 then they already have. Whereas MS has dropped the price and is still profitable on the hardware. Nintendo won't drop the price either...sold out is sold out so no need to "increase sales" and since they have made money from day one it's no wonder they are laughing.

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