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According to GamesIndustry.biz, analysts at major investment bank UBS have revealed Microsoft’s plans to subsidise the Xbox 360 at launch. Much as Microsoft did with the launch of the Xbox they are believed to be subsidising each Xbox 360 by $75 to ensure the console meets the $299 price point.
This $299 price point supports what J Allard told the press at E3. The $75 subsidy Microsoft will be paying may seem high but this kind of tactic is not unusual at launch; the aim to to get a large install base and then to recoup losses on the console with revenue from software sales. Microsoft themselves subsidised the Xbox at launch back in 2001 with the hope of reducing manufacturing costs later in the console’s lifespan. Microsoft found this hard with the Xbox as they had to buy components from Intel and Nvidia meaning they could not lower costs as much as they wished. This time around they expect to be able to substantially reduce the cost of hardware manufacturing later in the life of the Xbox 360.
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