Xbox 360 has been released about 2 years ago and still retails at its original $399 (pro model), while Playstation 3 who has been released a year later has already undergone a $100 price cut. Playstation 3's price reduction is sure to put pressure on Microsoft to reduce Xbox 360 prices as well. Microsoft has also managed to reduce Xbox 360 cost of production by switching to Xbox 360 Falcon chipset which benefits from 65 nanometer manufacturing process.
The smaller Falcon chipset both reduces the risk of overheating and lowers the production costs associated with the Xbox 360.
"We think that the $499 PS3 compares quite favorably with the $399 Pro 360 model, which has only a 20Gb hard drive and no HDMI output," said Wedbush Morgan analyst Michael Pachter. "Because of this favorable comparison, we believe that Microsoft is all but compelled to cut prices, and we think the price cuts will come no later than at Microsoft's Tuesday night press conference".
Pachter said in a note to investors on the forthcoming E3 Media Summit that he expects the Xbox 360 core model to fall from $299 to $249, the Xbox 360 premium model to fall from $399 to $349, and Xbox 360 Elite model to fall from $479 to $399.
On the other side, Darren Huston, president of Microsoft's Xbox unit in Japan has told Reuters that they don't have plans to cut Japanese Xbox 360 prices. Just for humor's sake, this is exactly what Sony President Ryoji Chubachi told Reuters just a few days before PS3 price cut went official. But Darren's statement seems to be valid. Xbox 360 poor Japanese sales are credited to Japanese gamers' preferences rather than its price which Darren believe to be "very competitive.
But both Xbox 360 and PS3 price cuts won't affect Wii which still suffers from overwhelming demand and a supply shortage, concluded Patcher.
