Microsoft gropes for market share with Xbox price cuts
USA: As the video game industry begins to ramp up for the holiday season, Microsoft announced Wednesday that it has cut the price of its line of Xbox 360 gaming consoles. The new pricing, which goes into effect Friday, starts at US$199 for the low-end console, the Xbox 360 Arcade model, down from $279.
For consumers, the golden price for a gaming platform is $200 or lower. Consoles retailing at or below that price point account for more than 75% of the systems sold, according to Microsoft.
"$200 is the critical break point for volume," Rob Enderle, principle analyst at the Enderle Group, told the E-Commerce Times. "People can typically justify up to a $50 premium for more features; over that is a much harder sale. The Xbox Arcade is low enough for volume. It will depend on whether the market views the Arcade as a full product or a crippled product."
If consumers view the Arcade - Microsoft's barebones model that comes with a scant 256 MB of memory for game storage - as a lesser product, then the price cut will be moot.
"The market does not like crippled products at any price," Enderle remarked.
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