Your article is right.
The most important statement that people should understand is that price doesn't determine sales, it is price plus momentum determines overall sales.
What shouldn't shock anyone is that the $200 price point and below is where the "Mainstream Sales" will kick in, and the Wii is only one price drop away from hitting this price point. The Gamecube sales have shown us that low price isn't everything, they need momentum in this industry. The PS3 will need to be price cut many times, and the XBOX 360 would need 1 or 2 price cuts to hit the level.
The question is this, since the entrance level is higher for the consoles, do you think that ultimately the "mainstream price" will be higher for the XBOX 360 and PS3. After all, it makes sense that after people have been accustomed to seeing a $600 PS3 that a $300 PS3 would be considered a steal? The same thing with the XBOX 360 premium at $480 moving to $300.
The data makes sense when applying it to consoles that launch at $300, but when applying it to $600 and $480 consoles the precedent hasn't been set yet at which is the "baseline" the casual gamers and nongamers will start buying one.
Omar Ismail said:
1. This generation hasn't really "started" yet. Or rather, Sony and MS are going to try and make this generation extremely long. Corollary: Wii's short-term success isn't a big factor on their strategy. If the current trends continue for another year or two, then Sony/MS will definitely have to react. Of course waiting a year or two TO react might be too late...
I think it has more to do with the position that the companies are in. You look last generation with the PS2, XBOX, and Gamecube. The PS2 was the undisputed leader for a long time and didn't need a price drop for a long time, common sense. The XBOX was Microsoft's first foray into the console world and wanted to make a brand for itself. That means they would do anything it took to keep up with sony, that means price cutting as a reactionary measure against sony and losing $5 billion on it. Nintendo on the other hand was selling badly compared to the other two and thus had to do price cuts out of desperation.
This generation on the other hand has all the companies in a different situation. Microsoft with the XBOX 360 is the first console released which means they din't need to lower the price for a while. That also means that if the XBOX 360 does a price cut, it is preemptive as opposed to reactionary. Sony on the other hand is on the losing side and they need lots of price cuts to hit a similar price point to XBOX. That is assuming that a higher price doesn't create new psychological barrier (ie: Since the PS3 launched at $600, a console priced at $350 is a "steal"). The Wii is also in the same position because they have momentum which means they don't need to lower the price because of the "perceived value" and price cuts will be determined more as a natural progression instead of out of desperation like last generation.
