Which, honestly, probably doesn’t come as a surprise to anyone. Of course, analysts were last predicting price cuts on the Xbox and PS2 repeatedly for over a year before it actually happened and when it did, it was only a mere $20 or so. Part of the reason major price cuts didn’t materialize is the simple fact that sales of the PS2 up until the last holiday were still going strong despite the price tag and Sony saw no need not to milk it for as long as they could. The only good reason for Sony to drop the price at that time would be to put the screws to Microsoft.
With sales of the PS2 down 49% and Xbox sales down 18% this past holiday period compared to the year before, though, the likelihood of price cuts as the year progresses becomes a fairly safe bet. You can thank Nintendo’s decision to drop the GameCube to $99 for this as they were the only company to see sales of their console hardware increase last holiday. The more intriguing prediction is that Microsoft may try to launch the Xbox 2 in 2005 to get a jump on Sony’s planned PS3.
Microsoft’s Xbox may be on the verge of a substantial price cut, falling from $179 to $99 by Labor Day, according to P.J. McNealy, an analyst with American Technology Research.
“It is our belief that the price on the consoles in North America could see a stepped drop this year, with both the PS2 and Xbox being cut to $129 between now and the May E3 trade show, with [Microsoft] then cutting the Xbox further to $99 in the late summer,” he wrote in a research note released Wednesday.
McNealy also believes Microsoft will launch its next generation console in late 2005 a year earlier than has been previously rumored. That would put the Xbox 2 on store shelves up to a full year before Sony’s PlayStation 3.
The column points out that an early Xbox 2 launch strategy could go either way for Microsoft and would be a helluva gamble. Sega tried that tactic with the Dreamcast and gamers liked the hardware, but many held onto their dollars to see what the PS2 would offer.