View Full Version : Microsoft Cuts Xbox Price, Seen Boosting Sale

30-03-04, 14:40

LOS ANGELES (Reuters) - Microsoft Corp. (NasdaqNM:MSFT - news) on Monday cut the price on its Xbox (news - web sites) video game console, in a move seen as a boost to the game publishing industry ahead of its biggest gathering of the year in May.

Microsoft, based in Redmond, Washington, cut the Xbox price to $149.99 from $179.99 and also trimmed prices on software such as the karaoke game "Xbox Music Mixer," "Project Gotham Racing 2" and "Crimson Skies: High Road to Revenge."

The price cut, which had been expected all year, boosted shares in game retailers and was hailed by analysts as a catalyst for more share gains in the coming weeks.

"The news is positive for video game retailers and publishers, since these companies benefit from a larger installed base that drives software sales," Smith Barney analyst Jill Krutick said in a note.

The Xbox price cut is effective on Tuesday, while the software cuts take effect Monday and Tuesday.

"Hardware price cuts should benefit video game publishers and retailers. A lower hardware price point should translate into higher hardware unit sales," Banc of America Securities analyst Gary Cooper (news) said in a note.

"In turn, a larger installed base of hardware should lead to higher sales of video game software. In particular, we believe that these price points will appeal to a more mass-market audience," he said.

Shares in the specialty game retailers, Electronics Boutique Holdings Corp. (NasdaqNM:ELBO - news) rose 64 cents to $27.98 and GameStop Corp. (NYSE:GME - news), rose 65 cents to $18.13. Both had built price cuts into their outlooks for the year, and other retailers said the move was good news as well.

"We know price cuts have usually increased public interest in (gaming) products in the past and we expect that to happen in this go-round." Circuit City Stores Inc. (NYSE:CC - news) spokesman Jim Babb said. Circuit City stock rose 28 cents to $10.96.

"The price cut is a good thing for the video game segment and we think that some recent strong software releases for the Xbox are driving a lot more interest and sales for us. (The cut) will put Xbox in a very competitive position," said Brian Lucas, a Best Buy Co. Inc. (NYSE:BBY - news) spokesman. Best Buy rose 10 cents to $48.29.

The Xbox was released at $299 in November 2001. The price dropped to $199 in May 2002 at the E3 industry trade show and to $179 in May 2003, at the same event. The new price was widely expected to come at some point before this year's E3.

The 2002 price cuts led to a sharp upsurge in sales of game consoles and software in what otherwise would have been the relatively quiet summer months. However, the cuts in 2003 were smaller than many expected and had little effect.

The move is a change in strategy for Microsoft, which previously cut the Xbox price only after similar pricing moves from industry leader Sony Corp (news - web sites). (6758.T) on the PlayStation 2 (news - web sites).

While many analysts expect Sony to eventually match Microsoft's latest pricing move, there was some doubt on Monday that the cut would come immediately. Sony executives said last week that their decisions on the future of the PS2 would not be determined by competitive pressure in the marketplace.

"We believe that a price cut of consoles will be beneficial for video game publishers and could signal a price cut of the PS2 soon, although we believe that Sony faces a Japanese accounting hurdle if it cuts the price of the PS2 prior to April 16 (within two weeks following the close of its fiscal year)," Wedbush Morgan analyst Michael Pachter said in a note.

Since early this year, analysts and publishers have called a move to $149 necessary for the game industry to achieve its growth targets for the year, and some have even raised the idea of prices going to $129.

"We doubt a $149 price point will be enough to drive (calendar 2004) hardware unit sales above 2003 levels," Piper Jaffray analyst Tony Gikas said in a note last Friday predicting the price cut.

"We estimate that a $129 price point on (Xbox) and (PS2) would result in 1.5 million additional hardware unit sales during 2004 compared to the $149 price point," he said.

Shares of Microsoft, which loses money on the Xbox but makes money on sales of video games, rose 28 cents to $25.31 on Nasdaq. (With additional reporting by Ellis Mnyandu in New York)

30-03-04, 14:55
Carnt say i am bothered, XBox is ****, its huge and heavy, my god its heavy, http://www.tombraiderforums.com/images/smilies/yikes.gif


Halo is good mind you!

30-03-04, 16:54
Yeah but if I had a choice between playing a game on PS2 or on Xbox I would choose Xbox for the loading speed and graphics. PS2 still reigns though with their controller...its awesome...plus the amount of games you can you buy is http://www.tombraiderforums.com/images/smilies/yikes.gif http://www.tombraiderforums.com/images/smilies/thumb.gif

31-03-04, 06:56
well since my birthday coming next month I might
just get a xbox .since I already have a ps2,gamecube

[ 31. March 2004, 07:58: Message edited by: kittykit ]

31-03-04, 16:46
w00t they're already 149.99USD @ the local Wal-Mart http://www.tombraiderforums.com/images/smilies/jumper.gif