Analyst Michael Pachter with US investment house Wedbush has told CVG.com that he expects price cuts in all the major consoles to come soon, led by the Xbox 360 and Kinect.
"We believe that Microsoft is in the driver’s seat on pricing, and believe that the company may consider a price cut for the core console plus Kinect to under $300 in June, which could allow it to extend its monthly sales lead throughout 2011.
Pachter notes that the other competing consoles have not been doing as well, but that they will be forced to follow along.
"A console price cut from Microsoft would almost certainly prompt its competitors to follow suit, and we are confident that by holiday 2011, all three consoles will be at least $50 cheaper than they are today."
The Xbox 360 has been the top selling US console for most of 2010, until it was briefly beaten to the top spot by child-friendly Nintendo Wii.
"Demand for the Wii appears to us to be fading, and we think that a price cut is long overdue. However, this time around, Sony has a motion control scheme of its own with Move, which is off to a very tepid start. We think that Move’s lack of traction in the marketplace is due mostly to the high price point for a system bundle ($399).
"On the other hand," Pachter added, "Microsoft’s motion control system, Kinect, has had a breath-taking start, with over eight million units sold in the first three months.
Noting that prices are still unusually high for this far into the console life cycle, the noted the current price structure which has been in place for 18 months already could not last very long.
"We expect Microsoft to announce a price cut at this year’s E3 Expo in June, and expect Sony and Nintendo to rapidly follow suit," he said in a research note.
There have been increasing rumours recently of Microsoft intensifying work on a next generation console. the Xbox 360 has been out a year longer than the other two consoles, and the traditional generational cycle is usually around 5 years per cycle.
T3 reports that recent Microsoft job posts searching for a graphics hardware architect, a performance architect and a hardware verification engineer have all offered the opportunity to work on an upcoming console release, suggesting new hardware within a year or so.
The news come on the heels of rumours of a next generation Wii2 with a blu-ray player and quad-core processor and projector said to be awaiting announcement at E3 in June this year.