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Microsoft has room to cut 360 S and Kinect prices in early 2011

Pachter weighs in on multiple SKU prices for motion controller

Microsoft's pricing for motion control peripheral Kinect and the new premium Xbox 360 S model has left the company with plenty of room to cut prices early next year.

That's according to Wedbush Morgan's Michael Pachter, who said that the $299 price for the new 250GB Xbox suggests the SKU is "very profitable".

"The only meaningful difference between the Arcade and Standard Slim Xbox 360s is the inclusion of a 250GB hard drive, suggesting to us that Microsoft has at least $50 of room to cut price on the more expensive SKU," he told investors.

"While we don't expect a hardware price cut from Microsoft until next year, we think that pricing on the new arcade SKU is a signal that price is coming down next year."

With the 4GB 360 retailing for $199 in the US and bundled with the Kinect peripheral for only $100 more, Pachter suggested that Microsoft would be content to sell Kinect at less than its current $149 standalone price.

"This suggests to us that the company has room to cut the price of Kinect to $100, and we expect them to do so early next year."

He added that the $149 price for Kinect was too expensive, and only expects a small uptake by the hardcore games consumer.

"Our bias is that most core gamers will wait for pricing to come down, but that 5-10 per cent will buy it. That suggests 2 – 4 million standalone units by the end of March 2011."

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Matt Martin

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Matt Martin joined GamesIndustry in 2006 and was made editor of the site in 2008. With over ten years experience in journalism, he has written for multiple trade, consumer, contract and business-to-business publications in the games, retail and technology sectors.

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