Microsoft Brings Out SECRET WEAPON B: Premium Price Drops & XBox Elite

I have returned with more information about the rumored XBox 360 price drops and system reinvention. I think this topic alone has created much buzz, simply because everyone keeps waiting for the huge holiday sale, only to be disappointed with empty promises. I promised Black Friday and Thanksgiving Day sales for the XBox 360 and it happened, in spite of all the nay sayers trying to discredit the news bit (and spamming me on MySpace – thanks Brandon).

ZOMG - Halo 3 in HDMI? I can't wait for Christmas 2007!
[ If you are like many console gamers and Halo 3 really excites you, you may want to read on! ]

With the first quarter of 2007 being mostly quiet, we see the same trends carrying on from 2006’s year-end news: PS3 still suffers from supply issues, forcing Sony to focus on their PS2. This leaves the next-gen arena mostly to Microsoft. Many say that this is the reason for which they will not be pushing price drops for a while, but I still beg to differ as it is much more complex than that. In fact, my colleagues at YouNewb have been dubious for a while until we got some mixed signals from certain Microsoft representatives. It turns out that the folks at Microsoft were telling consumers one thing and certain press/PR contacts another, essentially pitting us against each other!

The confusion is a simple marketing technique or ploy, depending who you talk to. You put enough contrasting messages out in the marketplace and people will start arguing about it. This sort of thing becomes viral in nature, thus spreading the word by way of the usual hype and buzz methods that online marketing is stellar for. Friends tell their friends and their friends tell their friends. Next thing you know, the news you passed along comes back to you but likely with spin. Microsoft has been brilliant in doing this.

I have been long professing that there will be major XBox 360 price drops in 2007 yet the impatient folks jump on the $399 and $499 (USD, of course) packages. These things have not been done consistently across all markets but Canada and the UK have seen huge price cuts on the Premium XBox 360 systems, while the US market sees great recurring promotions such as the ubiquitous 4 or 5-game bundles. The simple reality is that any marketer with even half a brain would see that now is the time to do massive price restructuring in order to penetrate more markets before the PS3 finally catches up. Now, you may say “don’t forget the Wii” but, for our purposes, Wii is in a market all on it’s own.

If you look at Microsoft’s official announcement, as alluded to on, XBox 360 Core Systems will be discontinued to make way for Premium System price drops and a new HDMI-optimized system that will directly compete with the PS3. While the XBox 360 does support HD, I must admit that the difference between composite, component, and s-video output is still neglible for the most part, even on high-end HD TV’s. The introduction of HDMI will be a huge improvement. For the gamers that have been waiting for the right time to choose a next-gen system, that time may be upon us soon.

XBoxIC’s full article on Microsoft’s Project “Zephyr” reveals what this really means for the XBox 360: more price drop possibilities! We have to remember that price drops come in different forms. In Canada, many stores now offer a bundle that comes with four hot games, two controllers, and discounts towards other XBox 360 goodies, including $50 off XBox Live Gold subscriptions. While this is not a wide-scale thing and is more of a little-known secret, I keep getting reports from my contacts out there about this and other deals. In the states, we have similar promotions but not the $199-249 price tag as some are seeing out there. The point is, such bundles are awesome when you consider how much money you are saving overall since, really, you can’t enjoy the system without games anyway!


As you can see, the new XBox 360 design packs new features that are remniscent of the PS3 in many ways. I would say that, by May 2007, we will see more uniform price drops in all markets, especially in the UK and US. The Premium system will become the entry point for most and those that can spare the extra mullah can drop $400-500 USD to get the Zephyr. Either way you look at it, it’s more bang-for-your-buck than the PS3 offers right now. The sooner Microsoft does this, the faster they can see growth and spread out XBox 360 units.

Whatever side you may be on, you have to give it to Microsoft for being notorious at stealing ideas and making them “better”, or at least bigger. The old argument by some of the fanboys and less-informed is that Microsoft loses money per console sold. This may be the case but, on the other side, reporters like myself have Microsoft representatives telling us directly that they have packed price flexibility into their hardware platforms in order to be able to stay competitive. Regardless of what the truth is, this has created more buzz in the gaming community; moreover, more systems solds means more software sales and, in the end, that is what counts. Market penetration is the goal here, not merely making profits from hardware sales. Hardware sales are hardly ever profitable. Anyone that has been in the industry long enough knows this.

As Zephyr approaches, I want to see how the PS3 responds. Everyone I’ve spoken to seems to agree that the marketing folks at Sony are maintaining a very snobby position here. They act like they are not phased simply because they have a “better, more stylish product” and smart consumers will do the right thing. Essentially, if they do not adjust their strategies, they will simply alienate more gamers and only drive value to the Sony fanboys, pretentious gamers, and gaming snobs. I personally believe Sony will have to do more than just sell the style and push the fact that they have “the more complete system”. In the end, the core gamers want a complete gaming system, not a multimedia computer replacement.

Before I forget, let me stress that a new XBox 360 system would mean that you can play Halo 3 with better graphics than ever. Let’s face it: this game has been the favorite of those that love fast-paced, adrenaline-inducing action coupled with breath-taking graphics. There is a reason that this has been Microsoft’s flagship game for the XBox and continues to give them a very viral message to spread out. All the talk about the beta (and how to get on it) alone had people talking to their friends and spreading rumors up and down the grapevines. With HDMI becoming part of the equation along with a new black chassis for the XBox 360, the coolness factor increases tenfold and the viral marketing will surely continue to spread like a blazing fire. I don’t particularly like Microsoft as a company but, I must say, they are doing the right things now.

Related Links:
* The Gaming Console Wars: Initial Thoughts
* XBox 360 Holiday 2006 Price Drop
* The Gaming Console Wars: Marketing Analysis
* XBox Dominates the Multiplayer Arerna (For Consoles)
* Data Cable for XBox 360 to Ease Upgrades
* Price Drop Considerations – Aggravated Gamers
* Why Waiting for a Price Drop May Not Be Prudent

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18 thoughts on “Microsoft Brings Out SECRET WEAPON B: Premium Price Drops & XBox Elite

  1. so what the fuck will happen to us folks that just bought the Premium Edition? Iam so disappointed…I could care less about HD capacity and the color but I am more in favour of the HDMI port. I swear I really regret buying one just rescently. I wonder if Microsoft will do a trade option..though very unlikely

    very very disappointed..

  2. I must admit that, while I like each of the current next-gen consoles for different reasons, I am more partial towards the 360 simply because it is multiplayer gaming that really does it for me. As writer, webmaster, and business owner, I don’t have the time to play single-player games and beat them like I used to. That being said, one thing that constantly disappoints me with Microsoft is their lack of product support. They tend to abandon projects quickly in favor of the “latest and greatest” and what’s worse is that the interoperability of their products often leaves something to be desired.

    Sony, on the other hand, is very good about issues such as backwards compatibility, product integration, and product longevity. If you could take the best-of-breeds approach from Nintendo, Sony, and Microsoft, you’d have the perfect console: a complete game library, good marketing strategy, fair market pricing, and complete product line interoperability. The way I see it, as the line between computers and gaming consoles blurs, they really need to drive more value into these investments.

    I agree with you complete on these items: a new casing and HD are not big deals because those things can be done after-market, if you really want them. The HDMI port, however, is a big selling point, even if you are dubious about the whole HD craze. I say that a trade-in would make lots of sense but I haven’t heard anything of the sorts. The scary part is that, even with these systems still slowly penetrating the market, you have talks of future consoles floating about.

    I can’t blame you for your disappointment. I would say that we can all start little waves by giving articles like this more visibility and helping people wise up. Sure, it’s cool to be the first kid on the block to have a system but those that jump on the bandwagon make it easier for these large corporations to strong-arm their customers. Microsoft is clearly shifting their focus on new markets and not doing enough to make their existing customers happy. That’s bad business.

    Let’s make some waves. Anyone that reads this and thinks it is messed up, add this blog to Technorati (button is on the right sidebar). I’ve provided a Digg link which you can add to, Technorati favorites, Stumble Upon, and any other social media tools you may have. Suggested tags: “price-drop”, “xbox-hdmi”, “xbox-360”, “microsoft-sucks” (LOL)…

    Here are some related sources, some of which spread more of the anti-price-drop propaganda. Price drop or not, there are greater issues here that I think we, as the consumers, should really educate people on. Every little bit counts. Here are some links… 8)

    I believe Microsoft’s stance on this is completely wrong. They are trying to create more perceived value by essentially saying that they are already competitively priced. They believe value pricing will diminish the perceived value of their console. Very poor foresight, if you ask me… but we all make mistakes – so is the nature of business (trial-by-fire, maybe)!

  3. I can’t blame you, KD. I prefer PC gaming myself because the games have much more replayability and longevity. Console gaming is a whole different market. It’s the exclusive titles that hook me in. Hmmm.. I feel like playing some Naruto on Gamecube ! ;o)

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  5. Yea man, down with Sony, though I’m a bit ticked off that they always make things better right after I buy. But I’m all on board for halo 3.
    Thanks for the info yogizilla

  6. Wow… very interesting.

    I guess this is always expected no? Part of being an early adopter is accepting the risks that something newer and hotter will come out subsequent to your purchase. I’m actually excited about the Zephyr although I’m left with a serious dilemna of what I should do with my current 360.. At that point when Zephyr drops, there’s going to be a flood of premium consoles on eBay.. so selling it at a reasonable price probably won’t even be an option. So not only would I have to sell my current system at a loss, but I’d have to pay more for the HDMI, bigger hard drive.. and black finish.

    I guess I’ll wait a year or so and see if the Zephyr drops as well.

    As for the console war.. Yogi, you said it.. the 360 is my choice because of the ease of playing multiplayer.. and Halo 3 is going to just make that even sweeter. I was hardcore Sony during the previous gen.. minus being a halo 2 addict, but they’re arrogance when dealing with their consumers has pissed me off one too many times.

    Anywho… keep the info coming!

  7. Hey Link!

    This is totally expected, especially from Microsoft. I think their product team gets bored. As it is, the XBox started off as a vague discussion on an air plane between two Microsoft guys that weren’t even real gamers. Their idea of “immersive gaming” was solitaire with multiplayer capabilities. As much as I’d like to say that is wholly an exagerration, it is not. =oP

    The news bit is certainly more interesting to those that have held out on jumping into the next-gen console arena. Those that are waiting for a deal have yet another light shining at the end of the tunnel. I am definitely not telling people to boycott or wait a long time before buying an Xbox 360 for themselves, but I am giving everyone a heads-up so that they can’t say I didn’t tell them!

    I’d also like to note that this 360 facelift makes the system more powerful than the PS3, insofar as overall hardware capacity goes. Several folks, including the team at GameSpot, have compared the 360 and PS3 graphics of certain shared titles and discovered, without a single smidgette of doubt, that the hype about the PS3 having more power and, thus, justifying the hefty price tag, is nothing more but baseless fanboy rhetoric.

    I’ll keep returning to this point: it’s all about the games but, if you are very tech-savvy and want the best-of-breed technologies at your fingertips, the XBox 360 pretty much pwns the PS3. Data sheets, tech specs, press releases.. Those are all marketing pieces that are dressed up to put create more hype. The facts are right in front of us. Sony has really dropped the ball with the PS3. I think their stellar success with the PSOne and PS2 made them more cocky than ever.

    I find it very refreshing to see more and more gamers acknowledge what others have been saying for a long time. Sadly, even as some key PS titles come to the XBox line-up, Sony still have some exclusive content to leverage so, eventually, one will have to concede and sell their soul to the devil. Haha… Sony is just an easy target now. The most interesting thing is that the Wii has more sales right now even though the 360 has been out longer so, while Microsoft and Sony play hanky-panky, Nintendo is running around, streaking everyone, and making everyone happy in their metaphorical pants. =o]

    Link, I am plugging BuzzFocus as I see it is a medium that, like my blog, focuses more on the underground, consumer education, and avoiding hype, spin, and bunk as much as possible. Good show! =oD

  8. Yog-man totally digg this article, or dugg it as the case may be.
    btw. I agree with KiNgDeem. never buy a system when it first hits the market. Between faulty machinery and poorly wired plugs the risk sometimes is just not worth it

  9. Thanks bud!

    I plugged your latest article on it in the ‘ol Digg comments too. Super-duper cross-promotion – WHEEEEEEEEEEEEE! Haha

    I am definitely the anti-thesis of early adopter. That logic applies to so much more tha just video games. Any technology is generally flawed in first and even second-generation production. Aside from the bragging rights that come with being the “first kid on the block”, I don’t see any reason for early adoption, especially not anything practical.

    That being said, those that have been holding out on getting a 360 may see a good chance to buy pretty soon. Technically speaking, this would be the third generation of the XBox 360, unless you consider the tiny little changes in builds (revision blah, blah, blah). I hope M$ has some foresight this time around and, instead of just copying ideas, creating some of their own. ;o)

  10. Lame…xbox360,xbox the most of you guys are now stuck with your 360 premium and regret buying it.. and microsoft?…they dont fuck*n care.. they just release a new version..and we (consumers) are stuck with the *old* i dont understand why MS deserves our support…And the specs..guys..PS3 IS BETTER than the x360,xbox elite…. just look @ the numbers! Yeah ok..Halo3 will kick ass.. (i loved halo1,halo2) but buying a console just for 1 game..? money on the Ps3..

  11. I agree people slate you off calling you a fan boy if you prefer the ps3?? I really cant grip this concept? I have both a 360 elite and a 60 gig ps3, the ps3 is the all rounded better console looks wise, connections, and processing power look at the figures it just is..

  12. Well, I won’t fuel the arguments regarding hardware “superiority” (it’s all about how well the game is coded and optimized for the platform, really) but I will say this: if you really want high-end hardware, you might as well get PC. It’s all about the games, the community, and the marketing – nothing more, nothing less. Of course, all the planning and support attached to those elements are HUGE! Microsoft had all the foresight going into these projects. They’re just milking it because, right now, they dominated the online gaming sector (on the console side, at least).

    I use the term fanboy mostly for chuckles. I mean no harm! I don’t assume that anyone that owns either system or has a preference is biased but, certainly, you can’t really objectively compare the systems definitively. Both Microsoft and Sony have missed the mark on A LOT of things and continue to do some shady and frustrating business practices.

    In any case, I hope both Microsoft and Sony quit their arrogant ways and treat their customers with a little more reverance. Without you guys and gals, they have no marketplace so it’d be nice to have them drive more value through everything that they offer. Personally, I think the XBox Elite is over-priced considering you can do just about all the modifications on your own (hypothetically speaking) and save lots of money. It’s no wonder they’re trying to get rid of the core systems floating about!

    Hey, in the end, all that matters is that you get to play the games you personally enjoy most! Arguing about which system is better is a moot point but, I agree, Microsoft seems to hang a lot of hope on their Halo franchise and should really seek to build other franchises! 8)

  13. People we forget Xbox and Ps3 are a Franchises. XboX is capitalizing on PS3 Late arrival of the game. Now with the real success of HALO and Big hits like Gears of War. Xbox is running with the momentum stream rite now . Personally AmniPata loves both consoles ,but hey I’m a gamer =)

  14. The franchise reality is not disregarded but I know that I share the feelings of many gamers: Microsoft is resting too much hope on Halo. I have heard from quite a few Halo fanboys that they were disappointed with Halo 3. The bar was set too high and the expectations naturally could not be met.

    I like all the consoles myself but I am analyzing more of the business components driving each platform right now. I feel the accessibility has been severely hindered right now and there just isn’t enough content to drive people, at least not the more casual gamers, to the PS3 and 360 platforms. I know I am not alone on this sentiement.

    All and all, the XBox 360 is certainly picking up more steam while the PS3 remains as the system to buy if you like the few titles they have to offer or just want to brag about being one of the two people in your town/city that owns one (if that). I think Nintendo has their marketing and business strategies as a whole set. Sony and Microsoft alike can learn a bit from their example, I’d say…

    …But I digress – this is not a console wars thread! I’m just saying a REAL price drop would be a good move for Microsoft now, especially as Sony refuses to do so with the PS3. They really need to get more units out there while the playing field is relatively empty. 8)

  15. BTW, for those debating on whether or not to get the XBox Strong Elite, it really comes down to the storage capacity and how you use your XBox 360. If you are like me and you have your computer(s) and multimedia solutions, you really only want the XBox 360 Premium so you can just play the games. Game data takes up very little space and can be stored on memory cards, if you wish to skip out on a hard drive all together.

    Now, if you want to rip CD’s, download tons of videos and songs, and do things that will definitely require a 100+ storage drive, then the Elite is the only way to go. Of course, you get the sexy black color so that’s a big bonus. Just don’t be fooled: this is the same XBox 360. Nothing is really different under the hood nor does this Box give you better audio-visual performance. In fact, you can get full 1080P HD beauty out of the Premium XBox 360 just fine – HDMI port included!

    If for some odd reason, your XBox does not come with an HDMI port, no worries. There are add-ons that will give you the interfaces you seek. The Elite comes with the cables and such. HDMI cables can be very pricey indeed. Overally, $100-150 more for a larger hard drive and a decent HDMI cable does add up. Sadly, I personally feel it’s not enough to make me want to upgrade.

    For those wondering why the disc drive does not handle HD-DVD, well, it’s Microsoft’s way of keeping the entry price more reasonable since not everyone will take advantage of the HD storage capacity and AV quality. It’s also a nice precaution in the event that HD-DVD and Blu-Ray both go the way of LaserDisc, MiniDisc, BetaMax, and the like (meaning, they no longer exist or are not supported).

    All and all, owning the elite version of the XBox 360 is more for looks and bragging rights, unless you have some VERY specific needs. I know some people are kicking themselves in the butt, wondering why they couldn’t have some foresight when creating the various flavors of the gaming platform. I say this: if you already have an XBox 360, you are not missing out on anything by not owning an elite. Hope that helps put things into perspective! =oD

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