Thursday, March 13, 2008

Console Post of the Week (Supplemental)

I saw this today from Aaron Greenberg, "group product manager" for the 360:
The software giant also expected that supply problems for the Xbox 360 meant the machine was outsold in the U.S. market by Sony's PlayStation 3 console in February for the second month in a row.

"We definitely expect we will trail in February as a result of our supply constraints," Greenberg said, adding: "By April, we will be in a very healthy inventory situation."

So Microsoft is basically conceding February in the U.S., and seemingly March as well.

Here's the question, though: are these manufacturing issues or a transition to a new model? I thought a few weeks ago that it was a manufacturing issue with the Falcons, but this is looking more and more like a conscious decision to drain retail inventory, not an unplanned manufacturing issue.

What that would logically mean is that Microsoft is preparing to introduce a new version of the console.

There's three ways they could approach this:
1. They include a bigger hard drive (60GB, let's say) in the Premium unit and make no change in the price.
2. They lower the price by $30-$50, but the hard drive is unchanged.
3. They both include a bigger hard drive AND lower the price.

Anything besides #3 is just nonsensical. Good grief, the actual cost different between a 20GB and 60GB drive should be negligible, and it just gives people more room to buy more products from the Xbox Live Marketplace. Just including a larger drive might only have a negligible impact on demand.

Include a bigger drive and cut the price of the Premium unit to $299, though, and that would be a huge move. One, it makes the price difference with the PS3 $100 compared to the primary 360 SKU, and I think that would significantly affect consumer demand. Two, timing the new SKU for launch in April in conjunction with GTA IV means that Microsoft would (presumably) capture the vast majority of people who held off on buying a next-gen console until GTA came out.

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