As the current generation of consoles approaches the final leg of its life-cycle and slowly evolves from next to past generation, speculation about what manufacturers will do to keep consumers interested reaches a climax and sometimes is best described as Mission Implausible.
The current trend of thought responsible for plenty of salty sweat-marks on cushy leather seats, is all about console price cuts. Every analyst, including EA's lot, claim that as the, traditionally slow, summer season approaches both MS and Sony will cut their hardware price to USD 129. A general E3 date is predicted as the most likely for the relevant announcements. Others however, have taken the whole thing a step further and suggest that Microsoft, in fear of Nintendo's apparent success, following the price cut which brought the GameCube to under USD 100 is planning a similar move for this coming fall.
The same sources that report such a dramatic price cut by MS, justify it by claiming that the company will release its next-gen offering (XBox 2?) in late 2005 rather than 2006. Such a possibility would definitely confuse the market, making the oldest console the most expensive. Sony would definitely not like cutting their price to under USD 100, especially if their plans for a 2006 release of the PS3 remain unchanged.
Before dismissing the speculation or discussing any possible ulterior motives, it would be wise to see if MS can, practically, produce an XBox 2 or XBox Next by the end of 2005. Hardware-wise it would seem that Bill has secured the necessary, big-name low-price, deals and now has ATI and IBM on board for his next console. MS also seem to be a working on a proprietary optical disc format for the games. What may be a lot harder for the team working on the future XBox console to resolve soon however, are the full technical specs of the new machine, especially considering that they have to achieve a balance between the demands of future gaming and the economic restraints of the industry.
Without those specifications, Microsoft partners would not be able to extend their full support for the platform and this could lead to problems with launch titles. Microsoft is expected to discuss XBox Next details at GDC this March but it is doubtful that hardware specs will be finalized by then. So the XBox successor could come early and Microsoft would definitely love to beat their rivals by a whole year, while also testing their financial commitment with a USD 99 price tag on its current console but that may involve the risk of releasing an unready console to a very demanding consumer group.
These comments on MS policy however, also suggest that other forces may be at work. Any MS rival, especially one with a cheaper product could, hypothetically speaking, release such information about a major XBox price cut soon, thus freezing sales of the product while consumers decide to wait for the cut. This may help such a hypothetical company increase a U.S. advantage it may have, only recently, announced.
Then of course we have the, also hypothetical, possibility that a major console manufacturer may be finding itself in very troubled and competitive times and may be trying out public opinion by releasing similar scenarios. In that way the, said hypothetical, company would confuse competitors while constantly gauging consumer reactions.
It seems that a slight drop in sales helps stiffen competition and may end up helping gamers as well.