Analysts: Japan Xbox 360 Price Cuts Precursors To North American Cuts

Analysts say that the recently-announced Xbox 360 price cuts for Japan are a precursor to similar cuts for the console in North America, as their forecasts for August NPD predict lower hardware sales. Lazard Capital Markets analyst Colin Sebastian says that hardware supplies at retail remain "spotty," with strong demand for Wii potentially outpacing stock, while a transition period for the PlayStation 3 to the new 80 GB SKU translates to a "lag in supply." Though Japan has traditionally been a weak market for the Xbox 360, Microsoft recently applied price cuts of about 30 percent there, following a complete sellout thanks to the launch of popular RPG Tales of Vesperia. The basic Arcade SKU was discounted to to ¥19,800 ($183), the 60GB Pro to ¥29,800 ($276), and the 120GB Elite to ¥39,800 ($368). Says Sebastian, "We believe the Japan announcement is a likely precursor to more aggressive pricing of the Xbox 360 in the U.S, and we continue to expect a lower $199 price point on the base Arcade SKU (below the $249 Wii price point), as well as lower $299 and $399 prices for the 60GB and 120GB versions, respectively." Wedbush Morgan analyst Michael Pachter says comparisons to previous console generations show "room for significant sales growth" this year if price cuts are implemented. Pachter currently sees "relatively stagnant demand" for Xbox 360, and pegs September 7 as the date speculated for Microsoft to reduce prices. Pachter's estimates for new Xbox 360 prices are slightly different than Sebastian's, predicting the Arcade going to $199 from $279, the Pro going to $299 from $349, and the Elite going to $399 from $449.