Pachter: Microsoft in control to begin hardware price cuts

News - Price cuts could come this year

Wedbush Morgan analyst Michael Pachter reckons that Microsoft are ideally positioned to begin a round of hardware price cuts some time this year.

Pachter believes that the success of the 360 and Kinect over the festive period has put Microsoft in a position to draw Sony and Nintendo into a round of hardware price cuts by making the first move this year.

He began: "After maintaining console prices at historically high points throughout 2010, all three console manufacturers appear to us to be poised for price cuts in 2011. U.S. PS3 sales were flat in 2010, while Wii sales were down more than 25 percent and Xbox 360 sales up over 40 percent; we think that Microsoft is in the drivers seat on price cuts, and expect the company to lower price on its console at the first sign of a year-over-year sales decline."

He continued: "Since the 'whisper quiet' black Xbox 360 was launched in June 2010 and Kinect launched in November, we think that sales will be up year-over-year at least until June, and we dont anticipate a price cut for the 360 until then. Microsoft has the ability to bundle Kinect with any of its 360 models at a compelling price point (we remain convinced that the manufacturing cost of Kinect is under 60 USD), and we expect to see a Kinect console bundle priced attractively by June 2011 if not sooner. In our view, a 299 USD price point for a Kinect/250Gb 360 bundle would force Sony to bundle Move with a PS3 at the same price point, and we think that Wii sales will suffer mightily with such competitive pricing."

Thanks IndustryGamers.