THIS THREAD IS FOR XBOX 360 NEWS
Xbox 360 price cut is clearance for new model
The rumors of a $50 price cut for Microsoft's 20-gigabyte Xbox 360 video-game console have been swirling for weeks now. It turns out they're true. But the reduction isn't exactly what it might have appeared.
In reality, it's more like a clearance sale, designed to empty the shelves for a new Xbox 360 with three times the digital storage, at the same price as before. The company says the new 60-gigabyte Xbox 360 will hit U.S. and Canadian stores in August at a price of $349.99.
As widely reported in advance, Microsoft is dropping the price of the 20-gigabyte Xbox 360 to $299.99. The unexpected twist: Sales of that model will end when current supplies run out.
In the highly competitive video-game console market, the move may have less of an impact than if the company had permanently decreased the price of the primary Xbox 360 model. A sustained price of $299.99 would have made the main Xbox 360 about $50 costlier than Nintendo's popular Wii game console, and $100 cheaper than Sony's least-expensive PlayStation 3 model. (Microsoft sells its Xbox 360 Arcade model, without a hard drive, for $279.99)
The effect on the market will depend on how much value consumers place on the additional 40 gigabytes of storage in the new Xbox 360 model, said Michael Pachter, an analyst at Wedbush Morgan Securities. Consumers use the Xbox 360's hard drive to store downloaded games and other media, including television shows and movies purchased from the Xbox Live online video marketplace.
Sony prices its PlayStation 3 model with 80 gigabytes of storage at $499.99, and one with 40 gigabytes of storage at $399.99. The PS3 has built-in wireless Internet access capabilities. The Xbox 360 requires a $99.99 adapter for wireless Internet access.
Pricing of the Xbox 360 is a key financial consideration for Microsoft's Entertainment & Devices Division, which includes the company's video-game operations. The division is under pressure to post consistent operating profits after years of losses. The move comes on the eve of the E3 video-game convention in Los Angeles, where Sony, Microsoft and Nintendo will be showing their upcoming games and accessories.
I'll be reporting from E3, so watch for coverage here starting Monday