Last week, Bloomberg (a news agency) published comments from David Hufford, director of Xbox product management, which lead people to believe that an Xbox 360 price-drop was imminent. Hufford was quoted as saying “We are all aware that the sweet spot of the market is really $199 bucks.” With that statement, everybody assumed that Microsoft was planning to take the Xbox 360 to that sweet spot.
Hufford later responded to the conclusions that were drawn and explained that Microsoft has no intention of bringing the Xbox 360 price down to $200, and that his statement wasn’t made to imply that. He says the afore mentioned comment was taken out of context and he was not signaling a price drop. Even with a firm denial of a price-drop, sites like AOL’s BloggingStocks are reporting that the Xbox 360 price has already been cut! In an article published earlier today, they say “So there you have it — the Microsoft Xbox 360 is now at $200 and the Nintendo Wii is at $250”. Interesting how news gets skewed.
It makes perfect sense for Microsoft to look into lowering the price though. Right now they’re the middle-man. The Playstation 3 is priced above them and the Wii is priced below them. A price-drop could help give them an even bigger boost over Playstation 3 sales, and maybe even bring them closer to the kinds of sales that Nintendo has been experiencing with the Wii.
While it would be no surprise to see a price drop before the holiday season in December, perhaps Microsoft is going to try and boost sales first by appealing to a new demographic? Microsoft’s next goal with the Xbox is to appeal to families, in particular mom’s who walk into the store looking for a deal. If we take a look at Nintendo’s marketing strategy which has included families, children, and even elderly, it’s worked well for them. By expanding their demographic, Microsoft is hoping to develop a “solid business with 90 million people.”
Part of appealing to a new demographic includes releasing games that will appeal to children and families. While this strategy alone could certainly give them a boost, I think a combination of a price-drop along with a new set of family related games would give them even better results.
For now, the price stands as-is with no change. There has been and always will be a lot of speculation in the gaming industry. Just because Microsoft is denying this rumor doesn’t mean that it’s not going to happen though. If they confirmed the rumor, it would just mean that people would hold off buying until the drop occurred, and what company wants stalled sales?