Xbox 360 to be lowest-priced next-gen video game console

One of the the biggest selling points of Nintendo's Wii video game console since its launch nearly two years ago has been that it was the lowest-priced of the trio of next-generation machines, which also includes Microsoft's Xbox 360 and Sony's PlayStation 3.

To date, the Wii costs $249, while the lowest-priced Xbox, the so-called "Arcade," retails currently for $279. An 80GB PS3 sells for $400.

But Microsoft said Wednesday that it will drop the price of the Arcade on Friday to $199, breaking through what some have said is the all-important psychological price level of $200. At that price, industry observers say, the market opens up to mass levels of consumers.

Microsoft will also drop the price of its 60GB Xbox to $299 and its "Xbox Elite," which has a 120GB hard drive, to $399.

"The fact that the Xbox 360 is now cheaper than the Wii is definitely a big shift in the market," said Aaron Greenberg, director of product management for Xbox 360.

The news has been rumored for some time and was first reported as fact Wednesday by BusinessWeek.

For Microsoft, this is a crucial step along its path toward winning the next-gen console wars. At E3 in July, the company said in no uncertain terms that it will win the battle, at least with Sony. It hedged its bets on out-selling the Wii, which has been dominant over the last several months, according to industry analyst NPD Group.

In fact, BusinessWeek reported that Don Mattrick, senior vice president of Microsoft's interactive entertainment business unit (and the person who had been on-stage at E3 and committed to winning the generation), said that he doubted the Xbox could catch up to the Wii at this point.

"I'm not at a point where I can say we're going to beat Nintendo," Mattrick told BusinessWeek. "We will sell more consoles this generation than Sony."

Of course, some have said that the appeal of the Xbox, despite being the first to hit 10 million units sold in North America, is still limited and that over the next few years, the PS3 will eventually catch up to and surpass the Xbox.

Until now, Nintendo has shown little interest in lowering the price of the Wii, and thus its profit margin. And while Sony has effectively lowered the price of the PS3 by offering only an 80GB version for the same price as what was previously a less-powerful version, it has little room to maneuver on price given that it is still subsidizing the PS3 at its current level.

By comparison, because the Xbox has been out a full year longer than both the Wii and the PS3, it has already achieved efficiencies of scale that have allowed it to slowly lower the Xbox's price.

To date, the 60GB Xbox has done about 60 percent of total Xbox 360 sales, said Greenberg, with the Arcade and Elite models each accounting for about 20 percent.

But with the Arcade's price dropping below $200, Greenberg said he thinks that model is "now picking up steam."

"Over 75 percent of all console sales historically were sold below $200," Greenberg said. "We know that there's tens of millions of PS2 owners who bought their systems when (the PS2) hit $199."

In other words, Microsoft is hoping that at $199, the Arcade can become the next PS2 and sell well over 100 million units.

Source: CNet.com

Third generation Zune pictures leak: 120GB and 16GB flavors

The third generation of Microsoft's Zune portable media player product line has been talked about and speculated for quite a while now, but very little has managed to leak out of Redmond, until now. A Canadian has supposedly somehow gotten his hands on both 16GB and 120GB flavors of the Zune, both of which are expected to be released under Zune 3.0 (recall that the original Zune 30GB is considered first generation and that the Zune 4, Zune 8, and Zune 80 are considered second generation). Zunited has four pictures the lucky Canadian supposedly took with a 2.0MP camera:

If you doubt the authenticity of these pictures because the 16GB box is in English as well as French, recall that this is likely because the Zune came to Canada back in June. There really isn't much else to glean from these images, other than the fact that the third generation Zune really doesn't seem to have anything new going for it on the outside, except for maybe a little gloss on the front.

Microsoft probably isn't trying to stray away too much from what it currently has hardware-wise, because it is likely hoping to again roll out the new firmware version to previous generations (like it did when it released the second generation Zunes). The first generation Zune was really a modified Toshiba 1089, and only in the second generation did Microsoft truly take over the hardware, and give the firmware and software a serious revamp. The third generation will likely only have minor hardware tweaks, and of course a new firmware version. Zunited claims that it has "undeniable proof from an exclusive and disclosed source that the 120gb model is running 2.5 firmware."

Source: ArsTechnica.com

$199 Xbox with Motion Controller on the Way

Xbox 360 Fanboy, citing "a tip from a source close to Microsoft's marketing department," says the price cut to $199 for the Arcade system is meant to position that bundle against the Wii. So it'll get a huge family-friendly marketing push and title support. And in the fall, it gets a motion controller with some motion-controlled mini-games developed by Rare.

Again, according to this rumor (by the time I'm repeating it to you, it's fourth-hand) the controller will be sold separately and will be compatible with all versions of the 360 console. Reading the story, it sounds like you would get the controller plus an even larger list of mini-games if you buy it separately.

The new products are set to drop Holiday 2008, says Xbox 360 Fanboy. We shall see.

Source: Kotaku.com