E3: Peter Moore

I don't know about significantly - I don't know the exact cost, but what happens is on a very regular basis you're constantly negotiating with suppliers - there's 1700 parts in an Xbox 360, and they come from a myriad of different suppliers, so as you build volume and the great thing about where we are is we've got a critical mass of volume, you amortise things, and again we're going to get into the reams of details, but again you amortise parts and then the suppliers you deal with can give you a better price and then your assembly costs - you get better at that - and so your price comes down there.

So it's not that one day it costs you USD 500 and then the next month it costs you 250. There is a waterfall of cost-reduction that goes on for years and it's planned out by the engineers, who are much smarter than I am, who have to figure out how you work with suppliers, how you assemble it in a more efficient way, how you get better yields in the factory, and, you know, it's no different than what Sony and Nintendo are doing right now - how you bring down your costs over a period of time, which allows you to pass that on to the consumer.

We have no plans right now to make any pricing announcement whatsoever. We feel real good about where we are right now.

Don't know. You know us. That is a statement I make on a daily basis, and you have to react. The good news is that it's something that we feel good about, having maintained our price from launch, and have had good volume, consumers see value for money - as we continue to cost-reduce it puts you in a better position to pass on the savings to the consumers. But no plans, no announcements.

Interestingly, I didn't see a price cut, and I must have been reading the wrong thing. It's still 499 and 599.

So they've added greater value at the same prices. Which to me is not a price cut. So I don't want to be anal, but I read price cut and I expected to see 399. When I hear the words "price cut" I expect to see a price cut. What they've done is they've added greater value in the form primarily of storage at the same price points. You know, I haven't made any comment - we'll have to wait and see, I did see Nintendo's George Harrison saying that it's ineffective, but the consumer will vote on that, and I think Jack did say, anecdotally, that their sales have doubled over the weekend, so we shall see.

Again, my opinion doesn't matter. They need to see if they can get their rate up from 20,000 a week. If they increase it 20 percent that's only 24,000 a week. So they need to see if they can double or triple their run-rate to get back in line with where they need to be. And I'm not sure adding more value triples their run-rate of sales, and I don't know what's going to happen in Europe because there's nothing been announced there of yet.

Well, the Elite is USD 479 here, but we allow - when the appropriate time for our team on the ground, our subsidiaries in particular obviously in the UK, they'll announce the price, which we won't be long.

One would hope so - although they're getting beat, what, better in relation to us, but getting outsold six to one last month by Nintendo?

Yeah, we move three, depending...We had Trusty Bell [Eternal Sonata in the West] ship a couple of weeks ago. Yeah, the numbers are the numbers. We shipped 7,000 that week, and we trickle on.

I think the bigger conversation about Japan and I try to make this point - I tried to make it last night - is that, again, by simply measuring hardware sales in Japan people only see a very small part of the very complicated relationship I deal with in the 50 to 60 times I've been to Japan in the last 6 or 7 years, and that is being part of the global publishing infrastructure with the Japanese publishers.

I use Capcom probably as the easiest one to - we met with Inafune-san three and a half years ago and laid out the vision for Xbox 360, in an open way that we do that typically our competitors don't, because they don't really get involved with the publishers. Inafune-san believed in our vision and convinced Capcom to green-light two titles - Dead Rising and Lost Planet, and both now are million-unit sellers that have done very well. Capcom of course in their fiscal year-end credited the great profits they made to the Xbox 360.

The ability for us to say every publisher now in Japan is publishing games is part of this very complicated respect you have to garner with Japanese publishers. When you go over there it is about face, honour and respect. They respect the fact we compete in the Japanese market. They also respect that their own market is flat-to-declining and they've taken a more global view. It would be easy for me to say, "you know what, we're simply not going to do business in Japan - we can't, they don't like Americans, they're too loyal to Japanese companies, they don't like foreign games" - whatever excuse I could make, but that would be disingenuous to what we need to give to Japan.

And Sakaguchi-san as well - Blue Dragon will ship here, and I think people are going to love Blue Dragon, and Lost Odyssey is going to be stunning, so we are making investments in Japan that will pay off on a global basis. Japan is far deeper than simply looking at Famitsu numbers and saying we're only selling 3,000 units. And I've spent more time sat on aeroplanes to Tokyo and meeting these people - it's still the cradle of our industry. It's still where some of the greatest games are made.

But more importantly, we're making sure they understand we're in 37 countries, not just in one, and we're doing business. We're doing a lot of second-party deals now. We're going to be representing a lot of the Japanese publishers in Europe. We've done that in Europe for years with Tecmo, we've created success with - I think all the way back to the original DOA [Dead or Alive] where we've done a lot of work in distribution for them, and you're going to see more of that from us because they trust us, we do great work, we've done probably millions of units now in the DOA series as a second party.

The team on the ground there and the overall second-party team do a great job over there, and we've got it down like a turnkey - we know how to distribute these games so it's a real deep and complex relationship and if I tried to explain Japan to you now...we've invested a lot of time over there. I've the greatest respect for all of those people, and I like to think they have the greatest respect for us. They like the fact that we go in and we compete and we try.