Microsoft Officially Slashes Japan Xbox Price

securitas writes "Reuters' Daisuke Wakabayashi reports that Microsoft will 'cut the price of its Xbox game console by a third in Japan, undercutting rival Sony Corp's recently reduced PlayStation 2 price ahead of the holiday shopping season.' The price cut takes effect on Nov. 20 when it will be reduced to 16,800 yen (US$155) from 24,800 yen (US$228). The cut comes a week after Sony's 20 percent cut in its PS2 price to 19,800 yen (US$182), which takes effect Nov. 13. (Gamespot brief) Does this hint at a holiday price cut for North America, too?" We mentioned price cut rumors for Xbox in Japan a couple of weeks back.

Comments

MS is nervous

[scumbucket]

Nintendo is turning up the heat with it's GC price cutting.....

Re:MS is nervous

[metallicagoaltender]

If MS is worried about Nintendo, they have their heads farther up a dark cavity than I thought. Nintendo fills a niche market, and fills it quite well. The only company MS is battling for console supremacy is Sony, and they've been getting their asses handed to them.

The only way they're going to make a real gain (even if it's shortlived) is a decent sized price cut compared to the PS2.

Re:MS is nervous

[Matrix272]

The only company MS is battling for console supremacy is Sony, and they've been getting their asses handed to them.

If you think the point of the Xbox was to become the dominant console on the planet, you're far more naive than I would have guessed. Microsoft isn't stupid, they know that the PS2 outnumbers the XBox by the tens of millions. The point of the XBox was to show that Microsoft COULD make a worth-while console, and to gain momentum. The XBox 2 won't even try to dominate the market... but it'll make more in-roads for Microsoft. I'd guess the XBox 3 MIGHT start really giving Sony a run for their money.

The XBox is already pretty obviously the most powerful console in the world, but it doesn't have the great games... because it doesn't have the great developers yet. The XBox sent a message to the developers that Microsoft was a very real force in the video game industry. The XBox 2 will send an even greater message, being that the public supports it. Around the time the XBox 2 reaches its 2nd or 3rd birthday, you'll see a massive influx of developers making XBox games. When the XBox 3 is released, Microsoft will clearly have enough developers to make Sony nervous.

The XBox was never going to take over the world... not even close. That was never the point anyway... Just watch out for the XBox 2 or 3.

Re:MS is nervous

[Acidic_Diarrhea]

The market strategy you are describing is indeed Microsoft's strategy but it's also important to note that no console manufacturer has ever used this model before. Mainly because no company has been willing to operate at a loss the likes of which Microsoft is currently seeing. When Sony jumped into the market with the PSOne, they didn't have a long term plan to slowly take market share away from Nintendo and Sega - they aimed to corner the market for that generation and move on from there. I think that you're overstating the future for the XBox - it certainly could go down the way you describe but it's not as likely as it seems you believe.

I don't think Microsoft is going to be a company that gets a devoted following (like Nintendo) since they have not really been a great first person game developer (outside of the third party companies that they've bought) so they're not going to have a guaranteed base they can work from.

And my final point is that you didn't hear all this talk of Microsoft planning not to win this generation of hardware with the XBox until after the XBox had lost. There was a program on G4TV regarding the making of the XBox and at the time of the launch, Bill and company seemed quite excited about the prospects. It's easy to say now that MS had planned all along that they wouldn't be able to win but I am sure there was quite a bit of disappointment in the sales department. The first console generation Sony entered, Sony won.

Re:MS is nervous

[Godeke]

XBox was Microsoft's experiment to see how much of the living room they could potentially grab. They have the resources to pour into loser consoles for another generation with the larger goal of making something similar to the PSX (the PS2 with integrated Tivo functionality, etc). Frankly, I think the PSX is being made to simply prove that Microsoft is going to be behind in that space as well, considering it's price is a bit high for the consumer space.

Re:MS is nervous

[metallicagoaltender]

I didn't say the XBox was battling the PS2, I said MS was battling Sony, and nowhere did I say MS expected to win this round. MS's success will still be measured in many ways against Sony, and as I pointed out, Nintendo isn't part of the equation.

Re:MS is nervous

[rwven]

that "niche" is outselling microsoft AND sony right now. I think your information is deeply flawed...

Re:MS is nervous

[Otis2222222]

Mainly because no company has been willing to operate at a loss the likes of which Microsoft is currently seeing

I have been hearing this line of reasoning bandied about for some time now and I have two questions:

1. Has anyone actually proven that Microsoft is taking a loss on each console sold? It seems to me that especially by now the hardware (P-III 733 Mhz, Nvidia Geforce graphics, cheap motherboard) is probably pretty inexpensive. Everyone takes this for granted but has it ever actually been proven that MS takes a loss on each console?

2. If the X-Box division of MS is operating at a loss, who's to say that it should be profitable by now? Let's be honest - if Sony wasn't such a big company in its own right it wouldn't have been able to launch a game console either if one of the requirements (as I believe your post implies) is that you have to make money from day 1. There is going to be a period of time for a new product like the X-Box where it's going to lose money as it gains traction and makes inroads into the market. They have clearly demonstrated that they have the ability to do this.

I tend to agree with the other poster - MS probably won't overtake Sony anytime soon, and maybe never will. But it's naive to think that MS is so stupid that they would sink billions into a market "just because they can".

Re:MS is nervous

[PainKilleR-CE]

When Sony jumped into the market with the PSOne, they didn't have a long term plan to slowly take market share away from Nintendo and Sega - they aimed to corner the market for that generation and move on from there. I think that you're overstating the future for the XBox - it certainly could go down the way you describe but it's not as likely as it seems you believe.

There's a difference between the market Sony came into and the market Microsoft came into, though. Sony saw a market that wasn't being reached by either Nintendo or Sega: 16-25, or even older, males that grew up with Nintendo and Sega but wanted something 'cool' instead of the same old stuff. They also saw that Sega had some of the right ideas (at the time) with arcade ports, and Sony made an arcade version of the PS1 to make those ports easy (much like Sega did with some of their consoles). Further, Sony saw that the optical discs could work if you used a memory card to store data. Then Sony signed up Square and sealed the deal with a lot of the previous Nintendo owners that wanted to see more FF games, and FFVII surpassed expectations for sure, bringing in many people that had never played any of the 6 games before it.

Microsoft, on the other hand, saw a market with potential to get them into people's living rooms, especially with Sony marketing their machines with CD and DVD player functionality. Microsoft stepped it up by letting you rip your CDs to the hard drive and letting you save games on the hard drive, reducing the memory card to a system for transporting saved games rather than actually saving them in the first place (which may have hurt MS in terms of all of those nickel-n-dime peripheral purchases other console makers thrive on). MS didn't have an untapped market they were aiming for, they were just trying to get the machines in people's homes, and get developers to put games on the machines.

I don't think Microsoft is going to be a company that gets a devoted following (like Nintendo) since they have not really been a great first person game developer (outside of the third party companies that they've bought) so they're not going to have a guaranteed base they can work from.

It's unlikely unless their in-house developers (those third parties they've bought) produce some memorable franchises that people want to see more of. Perhaps Halo can do that, but I'm not really sure, and though I remember the original Crimson Skies, that's certainly not the appeal of the new game for me. KOTOR, well, they'll never own Star Wars ;)

Re:MS is nervous

[Acidic_Diarrhea]

Naive? I'm naive? I haven't seen recent numbers from Microsoft in regards to the XBox but as of February of this year Microsoft was losing over 300 million on the XBox. And if you had actually read my comment, I made the point that MS didn't take these losses "just because" they could but rather because they had simply been unable to get the market penetration they had expected. Read an interview or two with someone from the XBox division and they'll talk about how they didn't expect to win this generation of consoles - which I find suspect. Honestly, who's naive?

Re:MS is nervous

[DAldredge]

Read the MSFT SEC fillings. Those 50-100 million USD per month loses in their XBox & related products division have to come from somewhere.

Re:MS is nervous

[metallicagoaltender]

Short term gains don't outweigh the longterm fact that Nintendo isn't competing with Sony and MS. They do what they do, and they do it well, but the massive price cut and its resulting sales certainly don't mean it's the king of the mountain.

Re:MS is nervous

[strech]

If MS is worried about Nintendo, they have their heads farther up a dark cavity than I thought. Nintendo fills a niche market, and fills it quite well. The only company MS is battling for console supremacy is Sony, and they've been getting their asses handed to them.

The only way they're going to make a real gain (even if it's shortlived) is a decent sized price cut compared to the PS2

Right now, the X-Box is getting it's ass handed to it by Nintendo as well. They're going to end up third everywhere but the UK (and a distant third worldwide, given their Japan sales, which will likely stay non-existant) if they don't react before the holiday season. They're only not being outsold badly in the UK because they're matching the Gamecube (not by price, but on a cut-vs-cut level).

Re:MS is nervous

[strech]

It's not that Nintendo is king of the mountain.

It's that this isn't Sony vs MS with Nintendo a niche player. It's Sony kicking everyone's asses, with MS and Nintendo fighting for leftovers. And MS is losing at the moment.

They may not be targeting a similar market to Nintendo, but they can't ignore it because the markets still have a lot of overlap.

Re:MS is nervous

[buffer-overflowed]

You're either ignorant or western-centric.

MS is not a viable competitor right now in Japan (you know, that country that the article is about) and probably NEVER will be. In Japan the two big guys are Sony and Nintendo with MS trailing a quite far distant third. The X-Box tanked there, think Turbo Graphics 16 tanked, think Atari Jaguar tanked. This means MS will not be any measurable part of the equation when it comes to imported titles. So it will remain in the gun game/fps/sports game niche it currently occupies. Hardly a competitor towards the wide genre mix Sony has, and not really competing with Nintendo's niche either. But while Nintendo still has opportunity to capture market share in their home market, MS continuously fucks up in what is to them a foreign market.

Here in the US, you still don't have a point, as GC and X-Box sales are about on par with each other after the most recent round.

Re:MS is nervous

[pmz]

I don't think Microsoft is going to be a company that gets a devoted following...

Then how do you explain the roving masses of clerics that append MCSE to their names?

Re:MS is nervous

[Acidic_Diarrhea]

those aren't people! :P

Re:MS is nervous

[h0mer]

they have not really been a great first person game developer

I wouldn't say that. Obviously Halo actually came from Bungie, but Microsoft has been putting out some quality titles for their machine. Midtown Madness 3, MechAssault, Crimson Skies, Rallisport Challenge, Project Gotham Racing 1/2, Top Spin, Amped 2, Links 2004 coming soon... All of these titles are a lot of fun and have good balance between fun and depth.

Obviously there's a common theme, all of these games involve vehicles or sports. Microsoft hasn't shown much in the way of other genres, but what they've made is pretty good so far.

Re:MS is nervous

[mausmalone]

If there's anyone X-Box is in direct competition with, it's Gamecube. They tend to have roughly similar numbers across the various regions. Sony is beating the snot out of both of them, though.

Wish they weren't though... don't like many PS2 games. :(

Re:MS is nervous

[Anonymous Coward]

"The X-Box tanked there, think Turbo Graphics 16 tanked, think Atari Jaguar tanked. This means MS will not be any measurable part of the equation when it comes to imported titles."

What the heck are you talking about?

Yes, the Jaguar definitely tanked there, like it tanked everywhere that matters, and for the right reasons. The Xbox is also doing very poorly, although Microsoft has been keeping the respirator on. But the "TurboGrafx-16" was just the American version of NEC's PC Engine, a system that was extremely popular in Japan. This one little system was more popular than any of Sega's systems until the Saturn, which Sega released during the end of the PC Engine's lifespan, and it was a fair second runner to both the Famicom and Super Famicom for a very long time.

It's true that Microsoft will never win Japan from Sony and Nintendo. They would bankrupt themselves in the process of trying. But whatever your original point was, I still don't know.

Re:MS is nervous

[Deliveranc3]

: Everyone takes this for granted but has it ever : actually been proven that MS takes a loss on : each console? Big M takes a loss on EVERY SINGLE PRODUCT except for windows and in some quarter's office. There was one other one, hotmail maybe? Something small like that. Their financial position in pretty widely available. It's also fairly terrifying, they can push anyone out of any arena through sales of a monopolistic OS.

whatever happened to the redesigned xbox?

[*weasel]

the smaller, lighter, cheaper one that's been rumored?

if MS is going to beat Sony's ps3 to market with their xbox next, they're running short on their window to release a refresher product.

particularly with their less-than-dominant market share, one wouldn't expect it to be worth the investment to redesign the thing if it's only going to be on sale a few months ahead of the xb2.

i'm thinking that the redesign is the only hope for further US price cuts.

Re:whatever happened to the redesigned xbox?

[edalytical]

> they're running short on their window

Very funny.

Re:whatever happened to the redesigned xbox?

[PainKilleR-CE]

if MS is going to beat Sony's ps3 to market with their xbox next, they're running short on their window to release a refresher product.

The PSOne redesign was only released about a year before the PS2, I don't see why we'd expect redesigns of current-generation products before the end of 2004 given that the next-generation consoles are expected in the 2005/2006 timeframe. Afterall, the redesigns are usually about taking advantage of the consolidation of the various parts in the system (something that the XBox can't really take as much advantage of given the fairly standard PC parts, though it could use smaller drives and a smaller motherboard) to release something smaller (and cheaper) for the low-price end-of-life run before, during, and after the release of the new system, not about revitalizing the product line in it's mid-life while it's still the current generation.

Re:whatever happened to the redesigned xbox?

[*weasel]

if sony plans on a holiday 05 launch, and MS plans to beat them to market (as has been claimed) MS has to be ready at least for an 05 launch. which means the redesign, ideally, should be up for a christmas 04 launch.

but the absurdly low price of the GC has changed the landscape a bit.

currently the xbox is the number 2 system (at least in the minds of developers) - but if the GC continues to sell red-hot at firesale prices, that may all change before christmas 04. You may see developer support shifting back toward the GC.

as such i was half expecting a holiday US price cut to $150 w/2 games and the redesign at $100 at least by summer 04. (which means more rumors and leaked specs/designs should be circulating right about now )

but really, i'm only asking because it's all more interesting to me than a japanese price cut, which simply brings their price on par with the fairly longstanding US/european pricing.

Re:whatever happened to the redesigned xbox?

[buffer-overflowed]

Even if we see developer support shift to the GC, there is a 1-2 year lead in on games development. Any gains in that area aren't going to be realized until just around the time of the next console generation.

So, this holiday season will probably determine who finishes at number 2 at the end of this generation.

Re:whatever happened to the redesigned xbox?

[PainKilleR-CE]

currently the xbox is the number 2 system (at least in the minds of developers) - but if the GC continues to sell red-hot at firesale prices, that may all change before christmas 04. You may see developer support shifting back toward the GC.

Right, except that, with the exception of the cheap, fast ports that most GC owners don't seem to buy, this probably won't effect the games coming out for the Cube itself, but rather for it's successor, especially if developers expect the next consoles to start hitting in late 05 rather than sometime in 06, and even moreso if the Japanese releases from Sony and Nintendo are still ahead of the US releases (as they were with this generation and most previous consoles).

as such i was half expecting a holiday US price cut to $150 w/2 games and the redesign at $100 at least by summer 04. (which means more rumors and leaked specs/designs should be circulating right about now )

Yes, except that Microsoft is more concerned with the image (to consumers) of competing with Sony rather than the image of competing with Nintendo. If they admit to competing with Nintendo (with a price cut that brings them closer to Nintendo's prices), then some people may feel that they're competing for #2 rather than #1, and take the cheaper console instead.

but really, i'm only asking because it's all more interesting to me than a japanese price cut, which simply brings their price on par with the fairly longstanding US/european pricing.

Of course, but then Microsoft recently launched advertising for their Live bundle, bundling Live (and the games that were bundled with the most recent Live kit) with the XBox at about the same price the previous XBox bundles were selling for (maybe a little lower, but I haven't paid much attention to XBox prices since I bought one a year ago, and I know it's lower than it was then). With that advertising campaign underway, it's unlikely they'll drop the price until the end of the month at the earliest (possibly Thanksgiving to capitalize on one of the biggest retail days of the year). Given the current advertisements, it's likely that any price cut so soon would be held pretty tightly by MS to keep people from waiting the 2-3 weeks for the cut.

Given the Zelda package is supposed to be out today, I may be heading out after work to pick up a second Cube for my apartment, making it the only non-handheld system that I've ever owned more than one of.

Re:whatever happened to the redesigned xbox?

[*weasel]

regardless of image and reality being what they are, if MS doesn't drop prices a wee bit for this holiday season (i kinda figured 3rd week of november too, maybe leak the price drop a few days before thanksgiving, feed the frenzy) then they may well not have the installed base at the end of 04 for xboxnext to matter. it'd likely be released and struggle without 3rd party support like the dreamcast.

although, sony also has its pvr/satellite/ps2 box releasing soon in japan. one would wonder if MS has an answer for that, should it come to america in 04.

i think it a foregone conclusion that MS will have pvr and tv tuning in xbox next - but it'd be interesting to see if they could cram it into the xbox refresh. the necessary larger hard drive might totally break their heat specs and current designs though.

Er --- isn't $155 less than the cost of the HD?

[Snafoo]

How big is the hard drive in the X-Box? How much do hard drives of that size run for these days?

Re:Er --- isn't $155 less than the cost of the HD?

[zulux]

How big is the hard drive in the X-Box? How much do hard drives of that size run for these days?

This is what is killing the XBOX. Manufacturers have a finite amount of space on their factories, and not one of them is willing to make a 8 gig hard-drive for Microsoft's XBOX when they could be making 120 gig hard-drives for DELL - UNLESSS Microsoft is willing to pay roughly the same price as a 120 gig drive.

If drives were sold by the Gig then the XBOX drive should cost $8 - (WD and Maxtor both sell a 250 Gig drive for $250 - that $1 a Gig) - but nobody will sell a drive, even at the smallest of sizes, for less that $50.

Re:Er --- isn't $155 less than the cost of the HD?

[Anonymous Coward]

Well, why don't they just sell the biggest size? Offer the bonus for free, and get a cost discount? It doesn't make sense to pay more, and give the consumer less!

Re:Er --- isn't $155 less than the cost of the HD?

[buffer-overflowed]

They should also be at about the point where they run into similar problems getting their chips made(CPU/FPU).

Re:Er --- isn't $155 less than the cost of the HD?

[Anonymous Coward]

Please note for the unschooled, WE (as consumers) pay $1 per gig and MS is not limited to this factor. A 20 GB drive may cost us $50 but that's to cover all sorts of costs between production and final sale, production costs are much less of a final part of that price, MS may very well be paying $8 for the 8 (now 10)GB drive in the XBox, but I doubt it.

Re:Er --- isn't $155 less than the cost of the HD?

[PainKilleR-CE]

The same thing goes with the other parts in the XBox.

Is Intel going to keep making 733MHz CPUs for anything less than a premium? Of course not, they probably aren't producing anything under 1GHz any more. Plus, if I remember correctly, there were some differences between the XBox CPU and a standard CPU, though not major, which would also increase the costs. The slowest Intel CPU you can buy at any given time is usually not much less expensive than the slowest current-generation CPU available.

Do you think nVidia's still producing a lot of GF3-era hardware when the GF4MX has taken over even the GF2MX's price points? They have GF4s and the GFFX to cover the mid- and high-end price points, with even some of the GF4 Tis slipping into the low-end.

This is also the major reason that ATI is probably a better choice for most consoles (as an off-the-shelf processor), because ATI has dealt with OEMs for most of their existence, and those people like to have chips available for a while (though not as long as consoles in most cases, still a lot longer than you might be able to find the same chips in cards on store shelves).

In the end, this is probably why Microsoft licensed technology from IBM rather than awarding a contract to produce the chips, since they could probably outsource chip production (or even do it themselves) over the long term for less than having IBM produce the chips indefinitely as all the rest of IBM's lines upgrade for new chips for Apple and others.

Just think, even if MS is buying single-platter drives, how many hard drives are being produced with 8GB platters? Not very many, since that would only produce 16 and 24GB drives, and it's unlikely you could buy a new 24GB drive for $24.

Of course, they're getting better prices than end-users normally see, but it still adds up to a loss (though smaller than the numbers most people throw around, even at launch the most detailed estimate I saw put it closer to $30-50 loss per console at $300 retail, which was, of course, at launch, rather than recently, so even with no cost reductions (and they have had some cost reductions in the manufacturing end) you're looking at $150-170 loss per console, max).

Re:Er --- isn't $155 less than the cost of the HD?

[pmz]

The same thing goes with the other parts in the XBox.

And through all this, Sony will probably devise a single-chip version of the PS2 and everyone will buy the DVD player that happens to have a PS2 inside rather than buy the PS2 that happens to play DVDs.

Why not even release a PDA based on a shrunk-down PS2 core? They've already got Linux on it.

Re:Er --- isn't $155 less than the cost of the HD?

[PainKilleR-CE]

And through all this, Sony will probably devise a single-chip version of the PS2 and everyone will buy the DVD player that happens to have a PS2 inside rather than buy the PS2 that happens to play DVDs.

As it stands they've already got the 2 primary chips down to 1 chip, and they announced in the last couple of months that they're starting production of that chip on a smaller fabrication (90 nanometer iirc). This would probably lead to use in the PS3 for backwards compatibility, though they'd have to maintain the I/O chip (or put that functionality into the main chip) for the PS1 compatability. As for a DVD player that happens to play PS2 games, it seems they're more focused on higher-end electronics for things like that, notably their Tivo-like unit with DVD recording capability that just happens to also play PS2 games (the PSX).

Why not even release a PDA based on a shrunk-down PS2 core? They've already got Linux on it.

Who knows, maybe it's a heat issue, or they simply feel that their existing line of PDAs is going in the right direction.

Re:Er --- isn't $155 less than the cost of the HD?

[pmz]

Who knows, maybe it's a heat issue, or they simply feel that their existing line of PDAs is going in the right direction.

While the Clie PDAs are certainly nice, it would be a mildly entertaining to see Sony come out with a PS2-based PDA Cell Phone to succeed where the N-Gage couldn't.

Re:Er --- isn't $155 less than the cost of the HD?

[Snowmit]

I thought I read somewhere on the Linux for Xbox sites that new Xboxs are running with larger HDDs in them just only the front 8Gb is actually used. I imagine you could do the same thing with a processor, just underclock it.

Re:Er --- isn't $155 less than the cost of the HD?

[ls -lR]

How is this insightful? Who modded this garbage up?

The HDs in the XBox are a meager 8GB... Actually, they're larger than that since no one actually makes 8GB drives anymore, but only the first 8GB are used. In any case a hard drive that size costs nowhere near $155. Pricewatch lists a 25GB 5400rpm Western Digital for $35 shipped.

For $155 you should be able to get about 180 or 200GB of space.

Re:Er --- isn't $155 less than the cost of the HD?

[ShadowDrake]

Well, I think there are a few sizes they can reasonable sell. If your drives have 20Gb platters, you can sell 20, 40, 60, 80G drives. Probably not much more than that. The 20 is cheaper than the 80 because it has fewer parts and less testing.

A 70Gb drive, OTOH, is probably not going to be sold for much less than a 80. Same amount of parts, similar test amount (perhaps you can avoid testing the unused side of a platter)

Saw this earlier today...

[mpath]

There was a thread on SlickDeals' Forums, linking to a scan of an upcoming post-Thanksgiving special at Wal-Mart. $80 USD for GameCube, Zelda game and a game carrying case... oh how the temptation rises!

Master of economics...

[Anonymous Coward]

"We mentioned price cut rumors for Xbox in Japan a couple of weeks back."

You don't say? You mean, you predicted that if a tech item is on the market for a certain length of time, the price might go down? Nawwwww..... puh-sha!

XBox is crap

[Anonymous Coward]

why would anyone waste their hard earned money on XBox?

All the games are wus-ass!

Great games?

[Anonymous Coward]

Funny, I've been playing Crimson Skies, GTA, MechAssault, Panzer Dragoon, Splinter Cell and KOTOR like nuts.

That's nice but. . . .

[ChewBakaSan]

I think that if Japan gets a price cut then we should to. I own a PS2, and so far Sony has a much wider selection of games than Nintendo or Microsoft platforms. They are going to have to change that before they will ever be able to beat Sony's PS3. I don't know what the new PS3 will be capable of but, I hope that it comes with a hard drive already built in, and the ability to play music cd's WITH the visual effects like the X-Box and the PS1.