Kmart Ad Trumpets Xbox Price Dip

A Kmart advertising circular is a strong indication that the rumors about a possible price cut for the Xbox 360 might be right. The discount chain's sales ad for the week of July 13 lists a US$299 price for the 20 GB Xbox 360. It represents a $50 decrease from the $349 Amazon.com lists as the price for the console.

When asked to confirm the price drop, Microsoft spokesperson Katie Abrahamson declined to do so.

However, Rob Enderle, principal analyst at the Enderle Group, told that the $50 drop is not a surprise -- though it comes a bit earlier in the year than he had anticipated.

"We thought they were going to do a price cut before the back-to-school season. This is a little earlier than I think most folks figured it was going to happen, but sales for consoles are typically slow now. The Xbox is the oldest of the three [current generation consoles]. With Nintendo ramping reasonably well into the holidays, it was about time for Microsoft to pass some of the cost savings it's been seeing on the component side back to consumers,"

he said.

Odd Timing

Price cuts for items with a big draw during the holidays typically occur closer to the end of the summer season, and Enderle said slashing the price in July seemed a little early and catches people when they historically are not in the market for a video game platform.

"I probably would have done it closer in so that I could catch the wave of people wanting to buy. Doing it this early -- people aren't really in the 'buying the game console mode' right now, and typically don't get into it until Christmas,"

he explained.

However, what may make this year different is an economic downturn, Enderle pointed out.

"[People] are staying home. They're thinking about things to do with the kids now that they aren't going anyplace. One of the things parents are likely to do is buy them a game system or something else to keep the kids entertained,"

he said.

Pricing Strategy

The $50 drop for the 20 GB Xbox 360 still leaves Nintendo's Wii as the lowest-priced gaming console available. However, for the Wii, the price of the console is not the major draw, according to Enderle.

"The things that are moving the Wii have to do with what the Wii does and not necessarily price,"

he said.

"I'm still continually disappointed by their price cuts,"

Yankee Group analyst Mike Goodman told.

"They would be in a much better position if they would be a little more aggressive on the price front -- create [a] little separation between themselves and Sony and create a better reason [for consumers to buy an Xbox 360]."

Microsoft needs to put distance between itself and the PS3 and lessen the distance between the 360 and the Wii, he said.

Enderle also expects to see a price cut from Sony for its PlayStation 3 console this summer.

"The price of components continues to drop, and the Blu-ray drive is a fraction of the price it once was. I think a lot of folks are anticipating that Sony will take a pricing action before we get into back to school,"

he explained.

Source: TechNewsWorld

Microsoft touts Xbox sales but laments online woes

SAN FRANCISCO (Reuters) - Microsoft Corp sold 4.3 million Xbox 360 video game consoles in the last three months of 2007, helped by hit titles such as "Halo 3" and "Mass Effect," according to company data released on Thursday.

But the software giant also said it was "disappointed" with problems that had plagued its online gaming service for days and offered a free downloadable game to more than 8 million worldwide users of the network.

A total of 17.7 million Xbox 360s had been sold worldwide since it first went on sale in late 2005, Microsoft said. Earlier sales data from the software giant showed 13.4 million consoles sold by the end of September.

"Holiday 2007 was a blockbuster season for the gaming industry,"

Microsoft said, adding that the Xbox 360 has kept its lead over rivals in terms of total dollars spent on hardware and software.

Microsoft competes against Nintendo Co Ltd's wildly popular Wii and Sony Corp's 6758.T PlayStation 3 consoles for dominance in a global video game industry that is thought to have approached $40 billion in revenue in 2007.

Nintendo and Sony have not released holiday sales figures for their machines, but by the end of September, about 13.2 million Wiis and 5.6 million PS3s had been sold globally.

Microsoft has counted on its Xbox Live online service to set its console apart from rivals. The service lets users download hundreds of games, as well as television shows and movie rentals.

But gaming Web sites and forums have been filled in recent days with complaints from users frustrated by not being able to sign on to the service or play online.

Xbox Live General Manager Marc Whitten said the problems stemmed from a "massive increase" in new users of the service over the holiday season, when sales of video game hardware and software surge.

"While the service was not completely offline at any given time, we are disappointed in our performance,"

Whitten said in a statement, adding that Wednesday had set a record for the number of users signed on simultaneously.

Whitten said that as a gesture of thanks to customers, all Xbox Live members around the world will be able to freely download one game over the service. Games sold on Xbox Live typically cost from $5 to $20, and Whitten said details of the offer would come in the coming weeks.

Before the holiday sales surge, Xbox Live had more than 8 million members, many of whom were paying $50 a year for the premium service that lets them play online against others.

The company also said "Halo 3," the final installment of its popular sci-fi shooting game that went on sale in late September, had sold 8.1 million copies by the end of the year.

Another Microsoft title, epic sci-fi roleplaying game "Mass Effect," had sold 1.6 million copies since its late November release. The games typically cost $60 per copy.

Microsoft's announcements came ahead of the annual Consumer Electronics Show in Las Vegas this weekend, when Chairman Bill Gates and other executives are expected to give a peek into the future of the company's products, including the Xbox 360.

Microsoft sees Xbox 360 sales growth in '08

Microsoft expects to sell more Xbox 360 consoles in 2008 than in 2007, with Europe standing out as a key battleground for dominance in the $30 billion video game industry.

In Japan, where the Xbox 360 has far lagged Nintendo's Wii and Sony's PlayStation 3, Microsoft said recent and upcoming games from popular Japanese designers should boost sales.

"We will sell more consoles next year than this year,"

Jeff Bell, head of global marketing for Microsoft's games business, told Reuters in an interview.

"We don't want to trade places with anybody,"

Bell said.

He said that the Xbox 360 was strong in Britain and was gaining market share in France and Germany, but that Sony had also been lifted in Europe by a recent price cut for the PS3.

"Europe for us is still the swing,"

Bell said.

"The biggest challenge is that Sony as a brand has had greater staying power than in other areas. Not just PlayStation 3, but Sony as a brand,"

Bell said.

Microsoft had seen some retailers sell out of the high-end Elite model of the console as well as of the lower-priced Arcade version.

Asked if Microsoft was benefiting from Nintendo's ongoing shortage of Wii machines, Bell said:

"Sometimes you're good, sometimes you're lucky, and it's wonderful when you're both."

Bell also took a dig at Nintendo, playing on an industry perception that independent video game publishers have not enjoyed great success on the Wii so far, in part because Nintendo's own offerings are so strong.

"Clearly, we have a competitor where they win and no one else wins. That is not sustainable, it's never been sustainable,"

Bell said.

Nintendo's U.S. president, Reggie Fils-Aime, told Reuters earlier this week that perception was misguided, and he pointed to recent market data showing that 60 percent of Wii game sales in November came from outside publishers.