C3H5N3O9
07-08-2007, 04:06 PM
This was originally posted over at llamma. But I found this to be an interesting theory; thus I am posting it here as well.
Back to my new theory: "Atlee's theory of Microsoft's ingenious counter to price-cuts"
The extended 3 year warranty is to counter the upcoming PS3 price-cut.
As some people will point out, the PS3 has not had a price cut. Albeit, Sony denies a price cut "at present," many trusted sources including Best Buy and Target have debunked Sony's' statements; Best Buy claims to have PS3's with the price-cut in their upcoming adds.
Now to why Microsoft has decided to extend the warranty instead of cut the price of the Xbox 360. Well obviously the main reason would be cost (money; and I know the extended warranty will cost about 1 billion dollars). Now I can honestly say I do not know the profit Microsoft is making from each console, but i can say that it is a decent amount. Since the hardware issues have most likely been resolved in the new consoles, Microsoft would only be fixing the older consoles (for the most part), and in time would cost less money than dropping the price of the Xbox 360 and losing the sizable profits from each unit sold. With this consumers will see the investment in an Xbox 360 as "risk free" because of a 3 year warranty, and not to forget that even with the rumored $100 price drop of the PS3, the Xbox 360 Elite is still more affordable. Therefore, the rational solution for Microsoft in order to counter the PS3 price drop, would be to extend the warranty on the Xbox 360 and refrain from dropping the price.
Now I do realize that this Theory was long and somewhat complicated, but as of right now it is currently 2:25 AM 7/07/07 and I am too tired to re-read what I wrote or even re-think my theory. So please bare with me and as always comments are greatly appreciated.
I forgot to include the part where this would hopefully prevent a class action suit. But I think this was also to counter the PS3 price cut as well as prevent a class action law suit.
By the way, I realize the chances that my theory is accurate, are very slim, that's why it is one of my many outrageous theory's.
The Man of Many Outrageous Theories,
Atlee
Back to my new theory: "Atlee's theory of Microsoft's ingenious counter to price-cuts"
The extended 3 year warranty is to counter the upcoming PS3 price-cut.
As some people will point out, the PS3 has not had a price cut. Albeit, Sony denies a price cut "at present," many trusted sources including Best Buy and Target have debunked Sony's' statements; Best Buy claims to have PS3's with the price-cut in their upcoming adds.
Now to why Microsoft has decided to extend the warranty instead of cut the price of the Xbox 360. Well obviously the main reason would be cost (money; and I know the extended warranty will cost about 1 billion dollars). Now I can honestly say I do not know the profit Microsoft is making from each console, but i can say that it is a decent amount. Since the hardware issues have most likely been resolved in the new consoles, Microsoft would only be fixing the older consoles (for the most part), and in time would cost less money than dropping the price of the Xbox 360 and losing the sizable profits from each unit sold. With this consumers will see the investment in an Xbox 360 as "risk free" because of a 3 year warranty, and not to forget that even with the rumored $100 price drop of the PS3, the Xbox 360 Elite is still more affordable. Therefore, the rational solution for Microsoft in order to counter the PS3 price drop, would be to extend the warranty on the Xbox 360 and refrain from dropping the price.
Now I do realize that this Theory was long and somewhat complicated, but as of right now it is currently 2:25 AM 7/07/07 and I am too tired to re-read what I wrote or even re-think my theory. So please bare with me and as always comments are greatly appreciated.
I forgot to include the part where this would hopefully prevent a class action suit. But I think this was also to counter the PS3 price cut as well as prevent a class action law suit.
By the way, I realize the chances that my theory is accurate, are very slim, that's why it is one of my many outrageous theory's.
The Man of Many Outrageous Theories,
Atlee