Console Makers Avoid Price War?

Microsoft made news last week by announcing that its new Xbox 360 game console will come in two versions. A $299 base model will play games, while a $399 model will include a hard drive, wireless controllers, and a headset. The price surprised many observers, and even led some analysts to raise estimates on Microsoft’s stock. (Console makers typically subsidize the machines, so higher prices mean lower losses per box.)

As we noted here earlier, Microsoft and rival Sony have been smart about setting expectations for higher prices with this generation of consoles– not so much with customers as with each other. Price communication is not simply for your partners and buyers. It can be valuable to communicate (through public, legal channels) with your competitors as well.

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