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Possible PS2 Price Portent Pondered
Londovir writes "Could Nintendo soon be sharing shelf space at the $99 rack? According to an article on IGN.com, an internal source at Target claims to have received printed fliers with the Playstation 2 listed at $99. If you remember from an earlier story from September, it was an advance newspaper ad from Target (again), as well as a leaked scan of a Wal-Mart ad, that told the world about the GameCube's price before it happened. Given how the GameCube is outselling the PS2 & XBox - would a price drop so low be so unexpected? One last tidbit to contemplate: Sony is ready to roll the manufacturing plants for their smaller 90 nanometer PS2 CPU. Maybe that price drop isn't so unbelievable after all..."
It's hard to see how Microsoft can get the XBox to profitability. The original game plan was that decreasing electronics costs would eventually make the XBox profitable at the original price point. But Nintendo and Sony aren't letting Microsoft maintain that price point. They've pushed the price of game consoles down from around $300 to $100. Microsoft was losing money on every unit at $300; it's worse now.
The only way Microsoft can make money with the XBox is if they achieve market dominance and pricing power. That's not happening. They've found themselves in price competition against larger competitors with lower costs, an unusual position for Microsoft.
Microsoft is trying to design a lower-priced XBox 2, which might bail them out of this hole. But that's still some time away.