Microsoft's X-Box Challenge

Implications: There are several key implications from this price move. First of all, the X-Box 360 is not moving well at retail, and there is "push-back" from retail vendors to get the hardware moving again. This lack of movement is causing a slowdown  in software sales, forcing developers and publishers to reconsider longer term planning and will impact X-Box-360 sales even further. Lastly, the world wide demand for the Playstation 3 is on the rise, and Microsoft needs to stimulate the X-Box 360 space. One question, why now?

Analysis:  The price reduction by Microsoft will bring that console more closely in line with the pricing for the Nintendo Wii, forcing Nintendo to reexamine their pricing policies, as well as SONY for the Playstation 3. In addition, the lower price point for the hardware will create further software demand as sales of the X-360 hardware rise, thus stimulating the market.
  The timing of the price move is significant, with summer normally being the slowest sales season for consoles. A close inspection of retail slow-moving inventories could provide the answers. Especially in Europe.