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Microsoft May Lower Xbox 360 Prices, Revise Hardware

Microsoft (Nasdaq: MSFT) slashed the shipments forecast of its Xbox 360 video game console yesterday, in a move some analysts believe will pave way for a future price cut and even an updated version of the game system.

Chief Financial Officer Chris Liddell said on Thursday that Microsoft aims to ship a total of 12 million of its game consoles by June 30 of this, the end of its fiscal year. This is down from a previous 13 to 15 million units target, but some industry observers feel the Redmond, Wash.-based firm is winding down inventories for an upcoming price cut.

“We assume roughly a $100 price cut with the premium unit selling for $299 versus $399 previously,” said Rick Sherlund, research analyst for Goldman Sachs.

“With Sony likely delivering enough consoles to meet demand by the June quarter,” he explains, “this would seem to be an appropriate time for Microsoft to move down the price curve and benefit from the elasticity of demand.”

Also, with Microsoft’s smash hit Halo 3 likely to begin shipping in September, Sherlund feels the software giant can still “become profitable in this quarter even with this price reduction.”

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Microsoft, xBox 360

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