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Goldman: Microsoft Xbox Price Cut To Increase Revenue, But Earnings Unchanged

Following Microsoft (MSFT)'s announcement Tuesday morning that it will cut prices on its Xbox game player, Goldman Sachs' Sarah Friar raised her revenue estimates for sales in the company's Entertainment and Devices Division, based on a jump in the "blended" average selling price to $356 from $274 for the quarter ended September.

In other words, more people will be buying higher-priced models of the Xbox [which comes in three flavors] after Microsoft cuts the prices on the different versions between $20 and $50. However, Friar says that although the mix will change, the price cuts weren't as high as she'd expected, and so she thinks that the cuts won't lift demand for the machine materially.

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Like a shadow I am3451d ago (Edited 3451d ago )

That shows ya how much she knows about the gaming world.

... clueless noob.

bung tickler3451d ago

what? an anal-ist thinks a price drop will help sales... MY GOD, MY EYES ARE OPENED!

Captain Tuttle3451d ago

She said revenue, not sales. There's a difference.

Funky Town_TX3451d ago

to every 360 they should drop the price by $100. Why wait longer. Get the price down and you can still make money from games, xbox live, and accessories. $50 is just stupid. Then again I don't work at a company that made $14 billion profit do I?

fjtorres3451d ago

As the price goes down, you bring in different gamers. Specifically, you get more casual gamers, more renters, and the ratio of "game-a-month" players to consoles goes down.
Remember, your typical suburban kid player gets one game or two for xmas, another for b-day, and rents/trades for the rest of the gameplay time. Also, as the market expands, you'll get more XBLA players (and some of those games offer *lots* of replay value) so you can't count on people buying as many retail disk-based games once the market expands. And then you get the game fans that lock onto one game (*cough* Halo *cough*) and play it for a couple years straight. ;-)
MS can't really count on selling 6 games per customer and making their money that way and, in fact, a comment was made last year that if XBOX's attach rate didn't go down it was a sign the console was failing to draw in mainstream buyers.
Long term, if you're going for mass market volumes, you have to be where Nintendo is, making money off the console *and* making money off the games and accessories.

MewMew3450d ago

lower the price for their MicroCrap console and/or get revenue, cause it'll still have the same hardware problems to this day. PS3 & Nintendo Wii 4 the win!

Hahaha! *Meeeeeeeooooooooowwwwww!*

i rule3450d ago

that inferior console is kicking the ps3s ass