FEB. 21, 2008 • Microsoft began a series of Xbox 360 price reductions starting in Canada. The price of the Pro model there was lowered to C$349 ($350) from C$399, the Elite went from C$499 to C$449 ($450), and the Arcade dropped to C$279 ($280) from C$299. On March 10, the company dropped €80 of each of its three 360 SKUs – leaving the Pro model at €270 ($425), the Elite at €370 ($582), and the Arcade at €200 ($315). Other territories managed under Microsoft’s European branch also saw price reductions. In South Africa for example, between 600 and 700 Rand were cut from each of the three SKUs on sale there. In that territory the Pro now sells for R2,999 ($369), the Elite for R3,999 ($493), and the Arcade for R1,999 ($246).

Impact: We have always said that hardware price is extremely important and getting to the $300 range is critical. Of course, the Xbox 360 still comes in a Rube Goldberg assortment of configurations to confuse consumers. However, being aggressive on price is probably the best way the Xbox 360 can be successful outside the U.S. and U.K.