Two of the three companies involved in the ongoing strugle for console supremacy, Microsoft and Sony, just provided evidence that the war is still going strong. Within an hour of each other, first Sony and then Microsoft announced a European price cut for their latest consoles. The suggested retail price of the PS2 and XBox consoles dropped to around 249 euros (USD244.80), from 299 euros.
Nintendo, whose GameCube console is priced significantly lower than the other two, claimed they felt that no price cut was needed for their product. Nintendo is after all second, behind Sony, as far as console sales are concerned.
The whole process which preceeded the price cut announcements pointed out how Sony, is the only console producer who can really control the market and dictate the pricing policies of the other two competitors. Considering Sony are estimated to control 65 percent of all game console sales, the extent of their influence is understandable. The best explanation Microsoft could offer for the price cuts, in order to salvage some concept of self management, was that the cuts were a planned Christmas reduction, which came a little early.
The price cuts which represent a 17 percent drop in price for the PS2 and XBox are aimed to boost game sales since most console makers make an average of USD10 on every title sold. No company makes money on the sale of a console, Microsoft is even reputed to be losing between USD76 and USD105 on each sale, so the main priority is to make a console purchase easier. Each console owner buys, on average of four to five titles a year so each potential owner is a fifty USD note being waved at the manufacturers face.
