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Microsoft: Higher 360 prices aren't a barrier to entry

Consumers must pay extra for console with hard-drive, but VP of Europe says "magic price points" will open up market

Microsoft has told that new Xbox 360 consumers won't be put off by higher prices now that the company is phasing out the £179 Premium console and only offering the Arcade and Elite units.

The company bumped up the Arcade price this morning, and for those looking for a console complete with hard-drive to take advantage of digital content, they now only have the option of the £199 Elite on store shelves.

"I don't see it that way," said Chris Lewis, VP of the Xbox business in Europe, when asked why the barrier to entry will be more expensive tomorrow when the new prices come into effect, than it is today.

"The way to see it now is that we're trying to make the premium Xbox 360 experience even more affordable for people. We're giving access to the Xbox 360 Elite. Research clearly shows this, when you reach these magic price points that are very important in the consumer marketplace, when you reach EUR 249 / £199 you do open up much more volume and accessibility.

"From our point of view we've rationalised and clarified the SKU line-up and made the premium experience even more affordable for people," he said.

Raising the price of the Arcade unit was necessary due to currency fluctuations, said Lewis, adding that the company did not see it as a mistake to drop the price of the Arcade to £129 over 18 months ago, as it helped accelerate the company into a leadership position.

"We're very happy with the results, and we placed a lot of time and rigour on this. We do a lot of consumer research and we thought it was the right thing to do at the right time. We wanted to inject more pace into the business 18 months ago.

"We also doubled our investment in media, we dropped our pricing twice last calendar year to get to what we thought was the right value offering across all of the SKUs at that time whilst putting in a high-level investment in marketing and people and the organisation to get us into the leadership position we now enjoy.

"We've got no tolerance to see that performance drop. Which is why we've aligned the prices in the way that we have today," he added.

Lewis also said that more console and software bundles will be on the way for Christmas, both from Microsoft and retail partners, and the company is bullish on its success during the festive retail period.

The price cuts aren't a reaction to Sony's recent lowering of the PlayStation 3 price, said Lewis, and the company intends to remain aggressive on price in the hardware market.

"Our appetite is to continue to win, and to hold our lead and grow our lead over the competition is very central to what we have planned in and budgeted in for the year," he said

The full interview with Microsoft's Chris Lewis, can be read here.

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Matt Martin avatar
Matt Martin: 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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