After more than 18 months of presence on the market, Microsoft’s next-gen gaming rig is getting a $50 price cut, confirming rumors that the Redmond giant is not only losing a lot of money with the console, but is also in danger of losing its supremacy in favor of Nintendo.
Although the price cut will affect only the US territory and is only half the size of the one operated by Sony for its PS3, it is still significant and shows that tough competition from Nintendo (which managed to climb to the third place in a top of Japan’s most important companies) is seriously endangering the profitability prospects established for the Xbox division at Redmond.
The price cut will be effective starting Wednesday, August 8 at US retailers nationwide, in anticipation of EA’s craved sequel for the NFL franchise, Madden NFL 08. The game will debut on August 14 and is expected to boost sales for the Xbox 360! , not only because the console is now cheaper, but because of the immense popularity that Madden NFL enjoys in the US (it was the top-selling game of 2006 and is still one of the top-selling franchises over the past 10 years). Madden NFL 08 has also been chosen as the best sports game at this year’s E3, receiving the Game Critics Award.
"The fact that we have been able to keep our launch price longer than any other console while retaining our leadership position demonstrates that consumers believe in the value of Xbox 360," said Mitch Koch, corporate vice president, Global Retail Sales and Marketing Group, Entertainment and Devices Division at Microsoft.. "On the eve of the best holiday games lineup ever and the launch of 'Madden NFL 08,' there has never been a better time to jump into Xbox 360."
The 20GB Xbox 360 pack will now cost $349.99, offering a wireless controller and a headset, while the Core Pack will retail for $279.99. The Black Elite Xbox 360 will have an estimated retail price (ERP) of $449.99, while the highly anticipated Halo 3-themed console, which will hit stores’ shelves in September, will be available for $399.99. The latter will also include, besides the Spartan green-and-gold finish, a matching wireless controller, a headset and an Xbox 360 Play and Charge Kit.
Microsoft also announced the games line-up that should make the acquisition of a (now) cheaper Xbox 360 even more enticing. Among the titles readied for the end of this summer, for this fall and for the critical holyday season are: "Guitar Hero III: Legends of Rock" (RedOctane/Activision), "Halo 3" (Bungie), "Madden NFL 08" (EA) and "Rock Band" (MTV Games), "Ace Combat 6: Fires of Liberation" (NAMCO BANDAI Games), "BioShock" (2K Games), "Lost Odyssey" (Mistwalker and feelplus Inc.), "Blue Dragon" (Mistwalker and feelplus Inc.), "Scene It? Lights, Camera, Action," (Screenlife), "Naruto: Rise of a Ninja" (Ubisoft), "Project Gotham Racing 4" (Bizarre Creations Ltd.) and "Mass Effect" (BioWare Corp.).
The software behemoth also boasts with the latest estimates provided by NPD Group, which give the Xbox 360 a strong lead in front of its next-gen rivals (namely Sony’s PlayStation 3 and Nintendo’s Wii), with a record-setting attach rate of 6.1 games per console sold. At the beginning of July, Microsoft also extended the warranty period for its console to three years, due to the high failure rate (or the “red ring of death” problems)- a move which will cost the company around $1.15 billion. Later that month, during a meeting with financial analysts and investors, Robbie Bach president of the Entertainment and Devices Division at Redmond allegedly admitted that every console sold out there is suffering from design flaws that could eventually lead to the red ring of death.
Despite these facts, Bach is confident that Microsoft will overcome the difficulties and that the 2008 profitability target is still reachable:
"If you think about consumer spending on the platform, compare since the launch of the Wii and the PlayStation 3 to date, so a little over, what, seven or eight months, people have spent $2.6 billion in the U.S. on Xbox 360 all up during that period.”
"That's almost double what they spent on either the Wii or PlayStation 3. There's a lot of traction with consumers around this product. We've launched in 11 more countries. We're now in 37 countries worldwide. We're in a very good position on the fundamentals of that business."
However, according to VGChartz.com, Xbox 360 is in danger of losing the top spot in favor of Wii, when it comes to the install base. The Wii is vertiginously closing in to the Xbox 360, with 9.94 million units sold for Nintendo’s console, in a bit more than 8 months, compared to 10.29 million units for Microsoft’s console, which was launched in November 2005.
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Although the price cut will affect only the US territory and is only half the size of the one operated by Sony for its PS3, it is still significant and shows that tough competition from Nintendo (which managed to climb to the third place in a top of Japan’s most important companies) is seriously endangering the profitability prospects established for the Xbox division at Redmond.
The price cut will be effective starting Wednesday, August 8 at US retailers nationwide, in anticipation of EA’s craved sequel for the NFL franchise, Madden NFL 08. The game will debut on August 14 and is expected to boost sales for the Xbox 360! , not only because the console is now cheaper, but because of the immense popularity that Madden NFL enjoys in the US (it was the top-selling game of 2006 and is still one of the top-selling franchises over the past 10 years). Madden NFL 08 has also been chosen as the best sports game at this year’s E3, receiving the Game Critics Award.
"The fact that we have been able to keep our launch price longer than any other console while retaining our leadership position demonstrates that consumers believe in the value of Xbox 360," said Mitch Koch, corporate vice president, Global Retail Sales and Marketing Group, Entertainment and Devices Division at Microsoft.. "On the eve of the best holiday games lineup ever and the launch of 'Madden NFL 08,' there has never been a better time to jump into Xbox 360."
The 20GB Xbox 360 pack will now cost $349.99, offering a wireless controller and a headset, while the Core Pack will retail for $279.99. The Black Elite Xbox 360 will have an estimated retail price (ERP) of $449.99, while the highly anticipated Halo 3-themed console, which will hit stores’ shelves in September, will be available for $399.99. The latter will also include, besides the Spartan green-and-gold finish, a matching wireless controller, a headset and an Xbox 360 Play and Charge Kit.
Microsoft also announced the games line-up that should make the acquisition of a (now) cheaper Xbox 360 even more enticing. Among the titles readied for the end of this summer, for this fall and for the critical holyday season are: "Guitar Hero III: Legends of Rock" (RedOctane/Activision), "Halo 3" (Bungie), "Madden NFL 08" (EA) and "Rock Band" (MTV Games), "Ace Combat 6: Fires of Liberation" (NAMCO BANDAI Games), "BioShock" (2K Games), "Lost Odyssey" (Mistwalker and feelplus Inc.), "Blue Dragon" (Mistwalker and feelplus Inc.), "Scene It? Lights, Camera, Action," (Screenlife), "Naruto: Rise of a Ninja" (Ubisoft), "Project Gotham Racing 4" (Bizarre Creations Ltd.) and "Mass Effect" (BioWare Corp.).
The software behemoth also boasts with the latest estimates provided by NPD Group, which give the Xbox 360 a strong lead in front of its next-gen rivals (namely Sony’s PlayStation 3 and Nintendo’s Wii), with a record-setting attach rate of 6.1 games per console sold. At the beginning of July, Microsoft also extended the warranty period for its console to three years, due to the high failure rate (or the “red ring of death” problems)- a move which will cost the company around $1.15 billion. Later that month, during a meeting with financial analysts and investors, Robbie Bach president of the Entertainment and Devices Division at Redmond allegedly admitted that every console sold out there is suffering from design flaws that could eventually lead to the red ring of death.
Despite these facts, Bach is confident that Microsoft will overcome the difficulties and that the 2008 profitability target is still reachable:
"If you think about consumer spending on the platform, compare since the launch of the Wii and the PlayStation 3 to date, so a little over, what, seven or eight months, people have spent $2.6 billion in the U.S. on Xbox 360 all up during that period.”
"That's almost double what they spent on either the Wii or PlayStation 3. There's a lot of traction with consumers around this product. We've launched in 11 more countries. We're now in 37 countries worldwide. We're in a very good position on the fundamentals of that business."
However, according to VGChartz.com, Xbox 360 is in danger of losing the top spot in favor of Wii, when it comes to the install base. The Wii is vertiginously closing in to the Xbox 360, with 9.94 million units sold for Nintendo’s console, in a bit more than 8 months, compared to 10.29 million units for Microsoft’s console, which was launched in November 2005.
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