The Times: Tech column - Console price wars
By David Rowan
Microsoft shocked the world of computer gaming last night by dropping the price of its Xbox console just five weeks after its British launch. The price cut, from £300 to £199, followed concern among analysts about lower-than-expected sales only weeks before Nintendo launches its rival GameCube console, priced at about £150, on May 3.
Although Microsoft insisted that sales had been "in line with our expectations", speculation had been growing that the Xbox was failing to dent the dominance of Sony's PlayStation 2 (PS2) console, even after a £350 million marketing campaign. Sony cut the price of the PS2 by £70 last year to £199 as it fought to maintain its dominance of the multibillion-pound console market.
Sandy Duncan, Microsoft's European vice-president for the Xbox, insisted yesterday that the price cut was purely a pragmatic response to market conditions. "We mean business in Europe," he said. "We want to make sure that price is not the obstacle to the Xbox experience."
Chris Whitmore, an analyst with Deutsche Banc Alex Brown, said that Microsoft was unlikely to meet its sales target of 4.5 million to 6 million units in the year to June, after selling just 300,000 in North America in the first quarter of this year. Mike Wallace, an analyst at UBS Warburg, said that the Xbox was too expensive.
The new price will be charged from April 26. Consumers who have already paid the higher price will be "rewarded" with a free Xbox control unit and two free games, such as Halo or Rallisport Challenge, worth £115, if they contact Microsoft through its website before July 1.
(The Times, April 19 2002)
Microsoft shocked the world of computer gaming last night by dropping the price of its Xbox console just five weeks after its British launch. The price cut, from £300 to £199, followed concern among analysts about lower-than-expected sales only weeks before Nintendo launches its rival GameCube console, priced at about £150, on May 3.
Although Microsoft insisted that sales had been "in line with our expectations", speculation had been growing that the Xbox was failing to dent the dominance of Sony's PlayStation 2 (PS2) console, even after a £350 million marketing campaign. Sony cut the price of the PS2 by £70 last year to £199 as it fought to maintain its dominance of the multibillion-pound console market.
Sandy Duncan, Microsoft's European vice-president for the Xbox, insisted yesterday that the price cut was purely a pragmatic response to market conditions. "We mean business in Europe," he said. "We want to make sure that price is not the obstacle to the Xbox experience."
Chris Whitmore, an analyst with Deutsche Banc Alex Brown, said that Microsoft was unlikely to meet its sales target of 4.5 million to 6 million units in the year to June, after selling just 300,000 in North America in the first quarter of this year. Mike Wallace, an analyst at UBS Warburg, said that the Xbox was too expensive.
The new price will be charged from April 26. Consumers who have already paid the higher price will be "rewarded" with a free Xbox control unit and two free games, such as Halo or Rallisport Challenge, worth £115, if they contact Microsoft through its website before July 1.
(The Times, April 19 2002)
posted by David Rowan at Friday, April 19, 2002
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