Xbox 360 price drop rumours resurface

Rumours of an autumn price cut for the Xbox 360 have resurfaced, with an unnamed source at a Taiwanese OEM component maker suggesting that production cost negotiations will lead to a US$100 retail price cut.

A new report on DigiTimes cites an unnamed OEM manufacturer, who claims that Microsoft has already negotiated production cost reductions with its suppliers, apparently in preparation for a price cut of up to US$100 ahead of the launch of PS3.

However, it should be noted that Microsoft is currently losing a significant amount of money on every Xbox 360 sold - and given the strong official denials of an imminent price cut, it seems more likely that component price reductions would be negotiated in an effort to reduce the firm's losses.

Indeed, only a couple of months ago Microsoft Europe boss Chris Lewis told our sister site Eurogamer TV that Sony had taken away any immediate pressure to slash the console price, due to the exceptionally high price point of the PlayStation 3.

Lewis' comments were backed up by UK head Neil Thompson, and further denials of an autumn price cut came in June, when John Porcaro, group manager of PR and communications for Microsoft US stated: "The official word from folks in the know is that there are currently no plans for a price drop this fall."

Whilst the DigiTimes report suggests that production costs for the console could be reduced by 15-20 per cent, industry watchers have suggested that a price cut before the end of the year is extremely unlikely.

Microsoft already has a competitive advantage over the PlayStation 3 at retail with its current price point - so the production cost reductions are likely nothing more than practical business sense as the platform holder increases unit production in preparation for the traditionally busy Christmas period.

However, it could equally be argued that revealing plans of a price-cut too soon could impact on current sales, as consumers hold back in preparation for a lower retail price point. As it stands, Microsoft remains firmly behind its previous denials of any shift in retail pricing before the end of the year.