Xbox Priced to Compete
Topic Pricing Concepts and Pricing Determination
Key Words Pricing objectives, competition objectives, competition objectives, Microsoft Xbox, Sony PlayStation
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News Story 

Details about Microsoft's next generation Xbox video-game console suggest Microsoft is far more concerned about keeping down cost than with including dazzling technological features or driving its rivals out of the business. The fall 2005 release is more-or-less designed to keep up with chief rival Sony, the maker of the top selling PlayStation video game console.

Though late to the race, Microsoft put itself on the map with a generation of gamers with the 2001 release of its Xbox product. Microsoft launched Xbox 20 months after the PlayStation 2 debut, and by the time Microsoft sold 1.5 million consoles, Sony had sold more than 20 million PlayStations. To date, Microsoft has sold 13.7 million Xboxes, while Sony has sold more than 70 million. In the United States alone, console sales amounted to $3 billion in sales last year.

For gamers, the new 2005 Xbox will be impressive, giving them the ability to play fast-action, realistic 3-D games on a high-definition TV set. And the console should be affordable as well: recent reports suggest that Microsoft will lower the price of Xbox as much as $30 by summer 2004

(March, 2004)

Questions
1.

What factors do you think might influence Microsoft's Xbox pricing strategy?

Source Dean Takahashi, "Microsoft Leaks Specifications for Next-Generation Xbox," Knight Ridder/Tribune Business News, Feb 1, 2004, pITEM04032009.
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