Summary
Xbox could have taken a different route versus a straight up price cut. Regardless, the Xbox isn't selling like hotcakes any longer and something is needed to drive sales in bulk beyond Halo 3. Playstation is a stronger device and before long, Xbox 360 will be an old-gen system.
Analysis
Xbox's price cut was a good move. However, it won't drive enough sales with $50 off the top model and a pittance of $25 off the "Core" system. The "top model", for reference, doesn't include significant storage, wi-fi, HD DVD, or a free trial for Xbox LIVE. Though $100 more expensive, Sony's PS3 includes Blu-Ray, wi-fi, totally free connectivity and eventually a social interface in HOME. In the interim, Xbox will nickel & dime gamers for Gold subscriptions, wi-fi, hi-definition beyond 720p (though 480p is the max for some content) with an attachment device (vs integrated) for $200, and even charge for rechargeable battery packs for the one controller you get with the system. So in the end, you get a 7-to-10-year system at a higher initial price for Sony versus likely paying for a system that will need significant upgrading in 3 years - if not outright replacement. So from that perspective, the price cut should have been $100 off the top model to match Sony's price cut and get closer to the $250 price tag of their main competition these days - Wii.
The two things Xbox has going for it today are Xbox LIVE and solid, exclusive titles. Starting with LIVE, the ability to download/rent movies & TV shows, plus messaging, video/content sharing and connected play are outstanding, and at least a year ahead of Playstation. That alone has driven sales. But sales have stagnated a bit, and it might be because of the Wii - which I bought for home (but have a 360 & Wii at the office) because my family can also play. The second area are exclusives. Halo & Gears of War are solid for pushing consoles. But I don't know anyone who doesn't own a 360 but plays Halo 2. Mostly, the folks who will buy Halo 3 already have a Xbox 360 and play Gears of War and Rainbow Six: Vegas shooter games. Hopefully, Mass Effect and Project Gotham Racing 4 show some strength and continue to push penetration. Playstation, on the other hand, had Resistance: Fall of Man, which was a great playing title. Otherwise, there's no Metal Gear Solid, Final Fantasy or Gran Turismo coming out this holiday season to push console sales. That said, the price cut has done a nice job in helping lift unit volume.
Globally, the gaming core are eagerly awaiting a reason to upgrade to a PS3. The price cut will do some, but the exclusive titles will have to do the rest. Killzone 2 can help, and maybe a couple others, but Sony needs one more, new edition of an established franchise. For me, it's FFXIII that will get me to buy a PS3 (again, I have one in the office). So until then, I'm working on my Xbox GamerScore.
