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XBOX: CHEAP AS CHIPS

The director of Microsoft's UK home entertainment and marketing division speaks to us about today's Xbox price drop in Europe

8:00 As of today, European gamers will be able to snap up Microsoft's Xbox console for €199.99 or 129.99. That, it has to be said, is something of a bloomin' bargain, or, to steal a phrase, as cheap as chips. Out for just over a year on these shores, the machine now retails for under half the original launch price. Blimey.
So what's prodded Microsoft into making this decision, and how does it now see Xbox when stacked up against the competition? We spoke to Chris Lewis, Microsoft's UK home entertainment and marketing division, to get the scoop.

Why drop the price of Xbox now? What's prompted it?

Lewis: We have to pinch ourselves sometimes, but Xbox is still the fastest growing debut console ever. Against the long-established competition and the great companies out there, with the heritage they've got, we're really happy with the market share we've got in Europe; and we want to continue that trend.

Reducing the price of Xbox for this period now is just fantastic way for us to both reinforce what's going on right now and continue to do that.

So it's not a direct response to the recent GameCube deals that have seen sales of Nintendo's consoles rocket, albeit for a brief time?

Lewis: What we always say, and what I've always said, is that we'll always work very hard to make sure that we remain competitive. We learnt very early on that that was a necessary part of being a key player in this industry - and we'll continue to do that.

What we've seen, particularly in the UK actually, is that Nintendo has had some challenges and issues with retail that pretty much resulted in what we thought of as almost a virtual price drop. In other words, in certain key retailers the price point had got terribly aggressive, for want of a better description.

And also, I think that in other parts of Europe Sony had worked creatively to develop other special offers in retail.

Our price move really is a response to these scenarios. We are going to remain competitive and will do, and we also want to provide retail with a clear pricing policy. You typically won't see us, as much as we can control it or get involved in it, in the virtual areas.

We want to be crystal clear with retail in terms of our pricing policy.

Xbox will now sell at the same price point as GameCube. Do you regard the Nintendo console as your main competition?

Lewis: We see both Sony and Nintendo as competition in this space for different reasons. We see ourselves most closely aligned, in terms of the product itself and the platform and the games, with Sony's market place. Clearly, it's all about consumers and about consumers getting their hands on a great gaming experience.

Nintendo is a great company, and we're very mindful of its activities in the market place. So we are, and will continue to be, responsive to both our competitors.

Xbox is now cheaper than PS2, despite it being a more powerful console. What are you doing to make consumers aware that Xbox actually contains the superior hardware?

Lewis: You'll see, and hopefully have seen all along that we have... Well, two things really. We make sure that we give masses of trial opportunities for Xbox. What we've found all along is that the product speaks so loudly in its own right that giving as many trial opportunities to gamers gives this enormous momentum to the product.

Because people love it - when they get their hands on it they just love it. It's a very powerful machine with strong technology - the hard disk, broadband capability, Dolby 5.1. The sheer power of it speaks volumes.

All along, we've been heavy on trial. The messaging in-store and the close work we've done with retailers is all about making sure they are clear on the technical capabilities of the Xbox. I think you've also seen the publishers enthusiastically writing to the platform because it gives them such a huge canvas to paint on.

With this latest round, you'll see us continue to talk a lot about the technology advantage but also working very hard to make sure that Xbox gets into the hands of as many hardcore and social gamers as is possible.

Will you be doing bundles based around the new price drop? If so, could you tell us about these?

Lewis: No comment on that at this stage. I think you may well see retailers developing their own unique propositions to their own consumers around the price drop. But we have no specific bundle announcements to make on the back of this pricing announcement.

Xbox has now been available in Europe for just over a year. What lessons, in terms of price point, have you learnt over that time?

Lewis: We learnt very early on that it is critical for us to remain price-competitive. I think what you've seen is that Microsoft... we do listen, we do understand what our consumers are telling us. Certainly, when we came to market, very close on the launch we took action to remain competitive. We also developed a reward pack for the consumers that committed early.

What you have seen and will continue to see is that we recognise it's important that we stay competitive. We will, of course, remain, from a technology standpoint, a fantastic proposition for users out there. But, as I said, we also recognise the need to remain competitive - and that's not going to change.

Finally, a number of big surprises from Xbox and Microsoft at E3 this year?

Lewis: You can expect to hear a lot from us there. I think you'd be disappointed if you didn't, and I'm saying to you that you won't be disappointed.