Microsoft didn't exactly drop the price of the Xbox 360 the weekend before E3. They merely lowered the price on the discontinued 20GB Pro version to $299 in order to make room at $349 for a new 60GB Pro model.
Why do that?
And why not use this opportunity to kill off the hard-drive-free Arcade version of the machine?
Don Mattrick, head of Xbox at Microsoft, broke it down for me at E3:
"What we've made a decision is that we can deliver three times the amount of storage to consumers with our Pro [version of the machine]. We wanted to work with our retail partners to manage the channel. And whenever you have a transition like that you need to develop a program against it. I think what we've done is over-deliver value to consumers. ... We wanted to announce it and have a lot of clarity. That's why we did it on the Sunday before the show so there wasn't ambiguity. Because if you remember last year's E3, others maybe did it in such a way that it created a whole bunch of confusion in the industry."
He was referring to Sony's switch to 80GB PS3s last year that had initially been reported as a price-drop until it was clear older models were being discontinued. But why not kill that Arcade machine off?
Mattrick: "What we've learned is that consumers like choice. So we're providing a choice in flexibility to consumers. There's different entry points. There's different types of experiences people want to use. That program is working for us. Retailers like it. Consumers like it. So that's why we have it."
[Multiplayer will have much more from our E3 interviews with the top gaming people at Microsoft, Sony and Nintendo as the week goes on.]