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Pachter says Xbox 360 price cuts will follow PS3's own

Posted Jul 9, 2007 at 3:54PM EST by QJ Staff

Listed in: PS3, Xbox 360 Tags: Colin Sebastian, Lazard Capital Markets, Michael Pachter, Microsoft, Sony

Following Sony's affirmation that it will drop the price of its high-end PlayStation 3 console's retail price to US$ 499, Wedbush Morgan analyst Michael Pachter commented that a similar price cut is imminent for Microsoft's Xbox 360.

"The value proposition for the PS3 is increased at the new lower price point, putting increased pressure on Microsoft to cut the price of its Xbox 360," he says. "The 80GB and 60GB PS3 models compare favorably to the 120GB and 20GB Xbox 360 models."

Pachter predicts that the Core and Premium Xbox 360 models are likely to shed US$ 50 off while the top-level Xbox 360 Elite should go from US$ 479 to US$ 399. He also says that the below target shipping of Xbox 360s from last week indicates that Microsoft may be on to a move next up.

Microsoft, however, is still mum on the subject. A rep says "Microsoft has not made any announcements regarding a price cut on Xbox 360," but Pachter expects confirmations to happen in the upcoming E3.

On a wider scale, analysts say that this move by Microsoft is geared towards the prevention of market loss to the PS3 in 2008. However, Pachter warns that the next fiscal year could signal a better period for Sony as the PS3's HD-playing capabilities begin to catch on to consumers on a global spectrum.

Analyst Colin Sebastian of Lazard Capital Markets views the move by Sony as a positive one which will result in better reception coming from key markets. "We are encouraged by SonyÂ’s willingness to cut the PS3 retail price less than a year following launch as component and production costs have decreased somewhat," he concludes.

Via Next-gen.BIZ

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Sales are still higher than PS3 in most areas. They are now reaping profits from the 360 and a price drop would lower those profits significantly.

Even if it were to go core 249.99, premium 349.99 and elite 399.99! I aint saying its not possible, but giving the facts and if MS doesnt want to look stupid, and continue to profit.

The new warranty also is costing them, questioning how much of a profit they now will receive at the current 360 sale price, because of it. It would also look bad on their part in the vein of stockholders who usually dont put much faith in a company that throws billions into something unproven (xbox failed miserably).

Sure, 10 million units in a year and a half is good, but good enough to be sure the stockholders money is safe?

Then again, a price drop to what you estimate (200, 300, 400) would increase sales drastically and likely CUT INTO Wii sales! So as long as its as big of a cut as Sony's, no problem .... but if its only a 50, 50, 100 drop? Thats very risky! But we will see ....

# Wii's price may most likly not drop — Guest 2007-07-10 12:22

From what i heard is that Nintendo only makes about at $40 profit off each Wii.

# Yeah, but see — Guest 2007-07-10 14:17

This is Microsoft. I believe MS as a corporation has 27 billion in its pockets. Plus the 56 billion Gates himself has to his name, which I'm sure if he really needed to he would spend to keep MS on top. One billion+ for the warranty deal plus whatever a price drop would cost is a lot, even to MS, but if it will gain majority market share they'll do it.

MS' E3 conference starts soon, so we'll see what happens

# yes — WiiCool 2007-07-10 15:04

I hope so. I am like a gigantic halo fan... I knew I would eventually buy a 360, I was just wating for this price drop and some major games. GTA4 is a nice bonus. This will be bad for sony, good for me.

# Looks like it didn't happen — Guest 2007-07-10 18:04

I think the conference is over now, it's playing some weird song on the G4 live thing, and it didn't happen. Oh well, the Halo 3 footage was AWESOME

And of course that's not to say a price drop will never happen, there's always Christmas ;)

MGS4 to 360 didn't happen either, and if it was gonna happen I would've figured it'd be at E3

# nothing — Guest 2007-07-11 09:38

nothing said at e3, btw mister common sense.... even g4, said sony had the best presentation.. hahah

# I would disagree with G4 then — Guest 2007-07-11 11:57

I'm not a fanboy of any console really, but I have seen the MS conference and am watching the Sony conference right now, and so far it's extremely boring. The only interesting things that have happened are the demo of HOME, which got boring after five minutes, and the awesome new MGS4 trailer (Raiden vs Vamp is amazing). So far the MS conference was way better

# Actually, I have to change that — Guest 2007-07-11 12:05

Now that I've watched the whole thing, I'd have to say the conferences were equal, all because of the Killzone 2 footage. That was friggin awesome. So I still disgaree with G4, but the MS conference was not way better

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