Xbox One Temporary Price Cut

Par for the course?

By Daniel Hickey

There's no question the $50 price cut on all Xbox One consoles and bundles is a tremendous move by Microsoft. They seem to have the better software portfolio this fall by a LOT (in my opinion), and now with a $100 price difference between an Xbox One with TWO Assasin's Creed games and the Playstation 4 Destiny bundle, this seems to be the perfect time for the masses to get their hands on a new-gen Xbox. But, is it going to bring about the holiday season "win" that Microsoft desires? Historically speaking, they may still have trouble selling enough to break the PS4 win streak. For perspective, let's go back to some numbers from the 360/PS3 generation...

(Note: All following stats are taken from quarterly statistics from Q4 2006 - Q2 2013)

The 360 performed poorly during Quarters 1-3, winning only 4 out of 20 when PS3 was also available. The 360 made its biggest impact during the seven Q4's in the console cycle, winning 4 of those 7, and of course that's when most console sales are made in general. This, coupled with a first-year jump start of just under 6 million consoles, is how the 360 maintained sales parity with the PS3 despite being less popular with hardcore gamers and with anyone outside the US. However, it is troubling that despite a year head start, not to mention a $100 price difference for most of the console cycle, the 360 only maintained equal sales. The trend of the Playstation carrying a greater acceptance by hardcore gamers has continued into this cycle, and the price advantage now goes to the Xbox once again, but will it bring the success the 360 enjoyed during the American holiday shopping season? I say yes, but I think things will return to normal when the shopping season ends and the price goes back up to boot. On the other hand, the Q4 market does seem to respond to a price drop on the more expensive console. The PS3 dropped its price in 2007, 2009, and 2012 and those just happen to be the three Q4's the PS3 won over the 360. You could argue this was due to the inherent PS3 advantage, but remember, Q4 is the time when Americans shop more, so in a way, these were pretty big upsets. Ultimately, I think Xbox One will win Q4 2014 by about a 1 million margin, but that is my opinion only, and the numbers insist that's not a slam dunk.

On the surface, it may seem a bit out of place for the Xbox One to get a price drop so early when it is performing historically well. It is, at last check, the third fastest selling gaming console of all time. The problem is that Microsoft is a company, a business. They have stockholders to answer to. Lost market share is lost money, even if it's turning a profit, and shareholders are upset by this. For perspective: In a head-to-head battle with the PS3, the Xbox 360 had approximately 62% of the market share in North America and 40% everywhere else. The Xbox One, head-to-head with the PS4, has only 44% of the North American market share, and an abysmal 24% everywhere else. That statistic is almost certainly why this price drop came so soon, and why the Xbox One absolutely must do well this fall to be considered a success, no matter how many records it breaks. Things are looking up for now, but many at Microsoft HQ will most certainly be holding their breath.

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