Analyst: $99 Xbox 360 is a “sucker deal”

Microsoft yesterday released a subsidized Xbox 360 and Kinect bundle at $99 which requires buyers to subscribe to Xbox Live Gold for two years at $15 a month. It certainly looks like a good move by Microsoft and it is hoped that more companies will offer similar services in the near future but analysts told GameIndustry.biz that they see this move by Microsoft as a “sucker deal”.

“At current prices the offer would save the buyer about $200 on the hardware, but XBL Gold is currently $5 per month. Increase the subscription price by $10 a month and the consumer pays for the hardware break in the first year, but is tied into the service at the same high rate for an additional year. Great for Microsoft, not so great for consumers.” said Billy Pidgeon of M2 Research.

Michael Pachter of Wedbush Securities agrees saying, “Maybe I’m just a finance geek, but the $99 360/Kinect with a ‘subscription’ looks a lot like a full priced sale financed at around 10% to me,”

David Cole of DFC Intelligence also agreed that it’s a disadvantage for the consumers. “As a consumer the prices being talked about look like a sucker deal to me. However, there definitely is going to be a consumer type out there that would go for it. Especially it may appeal to college students on a budget.” he said.

Overall, the analysts support the strategy of subsidizing hardware and believes that there is a future in it.