Proof of Xbox 360 Arcade price drop to $199: Being discontinued?
We reported a few days ago about a rumor doing the rounds about a potential price cut coming in September to the whole Xbox 360 lineup including the: Arcade, Pro and Elite models. Now, there seems to be further evidence this price cut will indeed be coming in September.
Apparently someone that works in one of the retail chains have sent VGchartz a screen shot of an Xbox 360 Arcade SKU that shows a price drop to $199. The Xbox 360 Arcade is the entry Xbox 360 model which currently retails for $279.99.
A $79 price drop of the Arcade model is a significant reduction in price when considering the usual price drops have been around $50. This move would position the Arcade model into the sub $200 category that the PS2 have been enjoying for quite some time.
The Elite Xbox 360 has also been speculated to drop from $449 to $399 which would position that model to compete directly with the PS3 price point. This price drop on the entire Xbox 360 model lineup would definitely put the Microsoft consoles in a much better price position to the competitors.
Now I have to throw caution to the wind here, remember this is still a rumor but you have to ask yourself the basic questions such as:
- If Microsoft was planning such a fantastic price drop throughout its entire lineup why wasn’t it announced during E3 instead of just announcing the Pro price drop?
- Maybe this rumor is just, well a rumor? Its been reported by iSuppli it costs about $323.30 to manufacture the Xbox 360, can Microsoft really afford to have the Arcade under $200?
As many of you probably know here on Gamer Blorge we strive to take it one step further by bringing you our analysis and take on the news instead of regurgitating the same stuff that’s been spat out on hundreds of other sites.
I have to say if this price drop is indeed true, then my gut and 25 years of video game industry experience is telling me Microsoft is planning to scrap the Xbox 360 Arcade model. Let’s take a look at the evidence here and see if it all makes sense.
1) At E3 Microsoft unveiled Neflix partnership, where users can download and stream movies. Since the Arcade model does not have a hard drive you cannot store movies and watch them.
2) Developers for games such as: Assassin’s Creed, Project Gotham Racing, Unreal Tournament, Rage and others, have openly rebuked the lack of hard drive across all of the Xbox 360 models causing the missed opportunity to use the hard drive for games that may need it.
3) If it does indeed cost around $323 to manufacture an Xbox 360, pricing the Arcade sub $200 would put them deep into the red again. Why would Microsoft do that, does Microsoft feel intimidated by the PS3 or Wii? I seriously doubt that at this time.
So there you have it guys, that’s my take on it, if the Arcade indeed does get a price drop then there are strong enough indications it will be discontinued forever. It also makes sense to thin their lineup and consolidate the models because it would help to clarify confusion as well.
**Update**
Ok guys, just received a response back from Microsoft and of course as expected a Microsoft spokesperson said:
“Microsoft does not comment on rumor or speculation.”
**Update End**
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34 Responses to “Proof of Xbox 360 Arcade price drop to $199: Being discontinued?”
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August 3rd, 2008
That iseek article just seems like pure speculation with saying a per console cost is $323.30. If the Elite was going to be dropped to $399, I’d expect the Pro bundle would be dropped proportionally to $299. This is still a $24.30 loss per console, by no means a large amount of money, but operating at a loss 3 years into the 360’s lifespan nonetheless. Add this on to the $124.30 they would be losing per Arcade bundle – it just doesn’t seem very realistic.
August 3rd, 2008
And how much is $ony losing per console sold?
August 3rd, 2008
You mean iSuppli, these guys are actually in the “know how” pretty close with the manufacturers so their estimates are pretty reliable.
Something sounds very fishy here,
Folks,
I will reach out to our Microsoft PR contacts and give you guys an update when we hear back.
August 3rd, 2008
Microsoft will not lower the price to $199.99 because the only thing missing will be maybe wifi and hard drive. No one will buy the ELITE or any other model. risky.
August 3rd, 2008
Oops, yes iSuppli is what i meant. You guys need to implement an edit post feature cause the only time I notice my mistakes, its always too late dammit
Doesnt the PS3 lose something crazy like $240 per 20gb console.
August 3rd, 2008
Why in the world would you use isupply estimates from 2 years ago? What in the world?
Costs come down in two years for goodness sakes. They have had multi board revisions since then, jeez.
Your three reasons are terrible.
For one, developers cannot just assume every 360 owner has a HDD even if the arcade was dropped.
This has got to be one of the strangest arguments I have ever heard. It actually sounds like spin.
This is a real deal sale and you will most likely see a ramp up in production before Christmas of the Arcade.
Also, guess what. This is a real price drop across ALL SKUs. Not just the $80 off the arcade which by this time is most likely very close to 2-250 in costs for MS.
Sorry price is by no means an indication of anything to what you speculate. These are going to sale like hotcakes.
August 4th, 2008
@Hunkee,
Of course it’s going to sell like hot cakes thanks for stating the obvious.
First of all the iSuppli tear down estimate was released first quarter last year (11/06 -3/07), second those are the latest figures which would make sense to use as reference, no? Unless you would like to calculate parts and components by hand.
I don’t think so.
The reasons are sound, the argument only sounds strange to you because well, you are thinking only along a one track idea.
Microsoft may want to have more consoles with HDD out there so Netflix can be leveraged more dominately.
Also some games on Xbox 360 are starting to have optional HDD installs, leveraging this option would be more feasible to somewhat quell developer’s complaints as well look better from a competitive market perspective.
August 4th, 2008
Tell me just one game on the 360 to date that has had optional install on the disc.
There are none. There are only two games that require install and one of them is FF XI which is an MMO and MS has a policy on that.
There is no getting around developers having to work with HDD less hardware. However, MS’s update this fall will allow optional install from the system, but this is very different in saying, “some games on Xbox 360 are starting to have optional HDD installs.”
As far as the isupply report, no sorry, November 23rd, 2006 says it all. Nearly two years since they have broke the costs down. I’m sorry but that break down does not cut it nearly 2 years later, and what 2 or 3 board revisions since that time with smaller components in each. 65nm and 65nm CPU board set should be on the streets in by time this price drop happens.
The Netflix thing may be an argument, but not necessarily one that makes the other points more justified, and not one that could stand by itself as a reason for the Arcade being discontinued.
August 4th, 2008
1. geezus, mike…that link to Isupply is from 2006. Almost two years old. good gawd man… don’t use old data like that. it’s been reduced considerably since then.
2. i have not met one 360 owner who has been “confused”, so i don’t know why 3 skus means “confusion” when sony’s had 4 or 5 skus since launch.
3. “by bringing you our analysis” – you have done NO analysis only given your “sense” of what’s to come.
4. the arcade may (doubtful) sell at a loss, however given the fact you ps3 fanboys like to bring up is that hardly anyone plays the arcade model, meaning their losses will be extremely minimal and easy made up for in the monies made from the other models.
analysis? yeah…right… *rolls eyes*
August 4th, 2008
Guys – cancel the Arcade?? Seriously . . .
1. Anyone thinks Microsoft makes any money on HDD add-ons? – Since when does a 20GB HDD cost $100?
2. Anyone think the Arcade probably drives a lot of customers to purchase the add-on drive?
Anyone who answers both questions above and still walks away with “yes, MS is probably discontinuing the Arcade” is a moron.
BTW – by association – that makes the writer of this article a moron.
I love the “confusion” . . . how many models of Hondas are there? Does Honda limit their car line up to avoid “confusion” among their cars? What do you guys think? Microsoft sells to more countries than Australia you know . . just cause an Aussie can’t figure out the difference between three clearly marked units . . . doesn’t mean the US will have trouble.
August 4th, 2008
Jonathan- why take shots at Aussies? I know its your ignorance getting in the way of your brain. Yeah Jonathan, you and I can figure out sku’s and decide what we want, but what about the Mom and Dad’s buying little Johny a console for his birthday? If they don’t care about gaming it may get confusing for them.
August 4th, 2008
Wylie is correct, given how popular the Roku Netflix player has been, im sure some people thinking about getting Xbox 360 for their kids and maybe to watch movies will get confused.
“Wait, you can’t watch Netflix movies on all of them?”
“So, you can watch movies on some and not others?”
August 4th, 2008
lame excuses.. you guys give parents waaay too little credit. they’re not as dumb as you think.
August 4th, 2008
Kev- Sorry Kev, i never said parents were dumb. They can be inexperienced in the gaming market however. I’m just saying that both companies need to limit how many sku’s they have. Not this well it has this size hdd but is missing this and that. Parents may not realize that some of these things are important! Back last x-mas I was in a store looking at games and a dad asked me a general question about the PS3, which was better the 40 or the 80 gig for his kids. I started telling him the differences and soon we had an audience of about 10 parents. Some of these people have no clue what they are buying!
August 4th, 2008
Jonathan by the crap you write about Aussies I would say by association your a complete moron.
What a douche.
August 4th, 2008
I don’t think they will drop the arcade model. That would be a stupid move if you can get it to sub-$200 with a reasonable loss.
Then again, this is MS.
I think this is an effort to push the 360 into more homes. Less confusion would be good for them. While kev may not know one 360 owner that has been confused, that’s because, normally, the person getting the 360, if not the person buying it, will understand what he is getting. NO ONE will spend HUNDREDS of dollars on an unknown.
If this is a push to get one of the models below the magic number of $200, I think we may get to see if MS has managed to shed that hardcore image. If they can get on track to get more than 30 million sold, maybe. My money is on about 25 million this generation for them, even if they can manage the best price, because Nintendo took the casual crown from Sony, and MS is starting to look at it a bit too late.
If they drop it to make madatory use of the HDD in the future, I expect there to be some trouble for MS.
August 4th, 2008
I personally think that they should slap the 20 gig on the Arcade model and drop the price.
August 4th, 2008
Wow . . . Sorry Brad, but if all you guys are Aussies, then I think you deserve what I say.
No one has addressed simple facts:
1. A parents stupidity in not being able to figure out they’re going to need storage space to download something is only extra $$$ for Microsoft. When after they’ve purchased the Arcade version their kid is saying 4 month’s later “hey mom – give me that hard drive add on, or I’ll cry.”
2. 80% of last gen consoles were purchased after the systems dropped below $200 . . . so WTF????? would MS discontinue producing the only system currently below $200??
3. Choice – I’m not sure if everyone’s noticed so far, but MS isn’t interested in landing a trojan horse in your bedroom. they don’t care if you bought the HD DVD player add on – but it was available. They don’t care if you buy the HDD but it’s availalble. I like how that Company works – it seems much better than buying out a DVD format war by forking over $500,000 to Warner Bros so they’ll dump HD DVD . . . and then overpricing your console right out of the market so you can include some outdated antiquated BD format no one will want in 3 years.
MS just won this console war if indeed there is a sub $200 console available this Chirstmas.
And Matt . . . as for “25 million this generation.” . . . WTF? they’ll hit that before this year is out.
BRad is a douche – ha we’re even
August 4th, 2008
oops . . . I left three 0’s off the Warner Bro’s purchase . . . $500,000,000. . . . that’s what Sony paid them.
And what did it get you guys? oh that’s right, higher Blu-ray drive prices, and slower Blu-ray movie sales.
August 5th, 2008
Jonathan,
speaking of trojan horses don’t think Microsoft is free of ulterior motives.
Don’t forget the only reason Microsoft entered the video game industry was to prevent Sony from controlling the eventual home entertainment and multimedia center.
Basically a Microsoft CEO called it “an insurance policy” back in 2004.
So, bascially when your on your xbox 360 your playing Microsoft’s insurance policy.
They really don’t care about the gaming industry they have said they will bleed money into their video game division because in the long run if they can prevent Sony from dominating the living room that leads a direct path for Microsoft to bring the 2nd computer into the living room since they already have the 1st computer on your desk.
August 5th, 2008
brad – sony has bled money this gen to the tune of 3.3 billion so far with the ps3.
it’s funny you don’t remember the claims from kuturagi of all home appliances running on “teh cell” (of course most of them being sony products).
and to say ms doens’t care about gaming when they have been one of the largest pc gaming publishers, is hilarious….
August 5th, 2008
and he spelled hilarious right, so it’s even funnier.
August 5th, 2008
Jonathan
Tell them, Tell them, Tell them. I’m glad I’m not the only one seeing what happened and how Sony presented a trojan horse to their loyal gamers.
August 5th, 2008
Cad- Please tell me, because I don’t know any PS3 owners that are disappointed with the bluray. The only people who don’t like it, funny enough, are you guys who don’t own one! No one is forcing you to buy one, so why don’t you give it a rest already. As far as what Jonathan said, MS didn’t want to pay for the HD-DVD, they wanted you to pay for it, thus an add-on. Sony ponied up the money by taking in large losses on every PS3 sold. So again why would the consumer care about this trojan horse you spead of?
August 5th, 2008
Sorry, I meant speak of.
August 5th, 2008
Im not saying Sony isn’t bleeding money this generation, I’m saying Microsoft will never give up they will continue to make Xbox 360s even if they bleed billions and billions and stay in the red for over 5 years.
Sony on the other hand might pack it up if things get to a point where they are in the red for many years making profit.
Look at what Sony did before they sold their Cell plants to Toshiba because they were losing money in that business sector.
Sony will cut whatever part of their business if it’s not profitable, but Microsoft will pour money into their Game Division regardless of it makes money or not because it’s an insurance policy for them.
They have stated they rule the desk and offices and now they want to rule the living room. Basically they want to get it to a point where they can have Windows in every living room and the Xbox 360 is a clear path to that goal.
There is some article around somewhere a former Microsoft employee talks about the “Windows Directive” where all business segments main goal is to support the success of Windows.
It’s pretty common knowledge to folks that keep up with Windows XP and Vista news.
August 6th, 2008
brad – the quote you’re talking about was from Robbie Bach in 2001 in which he stated ms was prepared to invest (read: “lose” by the fanboys) 4-6 billion to create a userbase and branding of the xbox. the 360 is already profiting.
the xbox never did simply b/c ms did not own the ip inside.
sony sold the cell manufaturing to toshiba in return for toshiba’s withdraw from the format war. it was a buy out. please get your facts straight.
SCE has not been profitable for a while now, even leading to staff reductions worldwide. yet sony keeps going, so your point fails.
ms doens’t use it’s gaming for insurance…that’s what their os is for… they can fail in every other venture and still clean up on that front….
wylie – ms didn’t want to FORCE you to pay for the hd dvd movie player unlike sony. don’t have a hdtv? too bad, pay for the bluray player in the ps3. no internet? tough…pay for the wifi they put inside the ps3.
sony gave noone a choice. it’s either pay for the features, regardless if you want them or not, or don’t buy a ps3…
from the poor sales of the ps3, i think the consumer aren’t happy with their strategy…
so far, they have 110 million “loyals ps users” that have disappeared from last generation… not good any way you spin it…
August 6th, 2008
Kev- first, Sony pretty much payed for the bluray with the losses they took and are taking on each console. As far as your WiFi crap, the 20gb didn’t come with WiFi, so how did they force that on the consumer? I love how you throw out the 110 million loyal users line in every other post. I don’t see the 360 picking up all those consumers, so your point is pretty much mute!
August 6th, 2008
WYLIE – the fact the console launched at $500 proves bluray was a factor. the price offset the cost, but in no way paid for it.
it’s funny you have to use multiple ps3 sku (that you clowns say is confusing for 360 customers) as a base of point. the fact is; it was there at launch and some people were forced to have it in the ps3 even if they didn’t have access to broadband. so, they paid for something that they had ZERO use for.
ms didn’t brag about their userbase like sony did. sony even said their userbase ENSURED their victory over the 360 and wii… yet there they are.. in last place…
August 6th, 2008
Kev- no what I have said is both companies sku’s get confusing. Don’t try to twist what I have said. And as I said the 20gb was a launch sku and did NOT have WiFi, so no it wasn’t forced on anybody. Funny how you say that it costs Sony money on every console sold, but now you are telling me that the $500 cost of the PS3 offset the cost of the bluray. Sorry Kev, it doesn’t work that way!
August 7th, 2008
wylie – that sku was also known as the “gimped” ps3 that noone bought…
the cost of the ps3 to sony at launch was reported to be around $700-$800.
they didn’t pay for bluray, noob. the upcharge of the ps3 from the ps2 and 360 is what’s paying for it.
it’s called a razor to razorblade business model. they hope they can make the money in software and ecommerce sales.
bluray WAS forced on EVERYONE and was identified as THE reason for the upcharge… not good move considering this:
http://www.itworld.com/news/54045/without-ps3-blu-ray-struggles-mightily-acceptance
August 8th, 2008
Kev- once again you posted a poll. As I have said before polls can be flawed. Chances are they polled a majority of people who don’t have HD tv’s and don’t plan on buying one anytime soon. I say chances are because people who own HD TV’s are the minority. True, bluray is a little ahead of its time, but as HD TV’s become the majority over the next few years, I think bluray will become more of an option to them. Remember bluray is still expensive, those prices will come down. I’m sure if this poll was done when DVD came out you would have seen pretty much the same results!
And please don’t talk about a business model. Everyone knows that most consoles lose money at launch and they depend on software sales. However the PS3 was losing more on each console than the other companies.
August 8th, 2008
wylie – the poll COUPLED with the POOR bluray players sales, proves the point. squint all you want, but the facts are right in front of your eyes…
you DO realize the majority of people DON’T have hdtv and would be required to upgrade to take advantage of bluray. hence the lack of interest and poor sales.
contrary to what you fnaboys believe, bluray is going to need a lot more than the ps3 to survive. price drops are nice but at the one year mark, bluray players are still above $500 on average. not good.
if this poll was done when dvd came out it would be very different. (gawd, i’m getting tired of teaching you history).
1. dvd didnt’ require anyone to buy a new tv.
2. dvd players were already priced below the ps2 at launch.
geez….
August 8th, 2008
ps…wylie. abi research is pretty reputable and this isn’t a “poll” but rather a consumer survey.
http://www.abiresearch.com/press/1203-Consumers+Delaying+Blu-ray+Player+Purchases