Microsoft will reduce the price of the Xbox 360 games console, in direct response to Sony lowering the price of its PS3, after all. When the Sony cut was announced most analysts were aghast that Microsoft failed to follow suit and maintain a healthy price distance between the two devices, and the recent Microsoft results showed that since the arrival of the Nintendo Wii and the PS3, sales of the Xbox have fallen dramatically.
Microsoft has cut its price around 13% taking $50 off the premium model, now down to $350, with the PS3 now sitting at just $500. Financial analysts are equally concerned at the price cut, noting that the Xbox is still losing money, even without the $1 billion warranty write down that Microsoft put in its books, due to returned faulty devices. It has effectively extended the warranty to three years.
The smaller Xbox 360 with no hard drive falls just $20 to $280 and the Elite model, with the extra large 120GB drive, falls $30 to $450.
We continue to feel that the Xbox business will remain loss making for the foreseeable future, and that Sony has a long lived device in the PS3 that will slowly pick up pace, and the surprise success of the Nintendo Wii has eaten up a lot of the ground that Microsoft had taken for granted.
Meanwhile comments made this week by Sony executives hinted that the PS3 will shortly add a TV tuner and digital video recorder, and in its native Japan its portable cousin, the PlayStation Portable has been given a $60 tuner to pick up the 1 seg mobile TV services of ISDB-T. We said a full year ago that Sony would be mad not to add mobile TV tuners to the PSP, and a DVB-H and MediaFLO tuner may both emerge as those mobile TV services get off the ground around the world.