Having lived in Europe for a long time, and now living in the US for a long time but going back every year, I think I know what the problem is. The Europeans don't understand how extremely integrated and competetive the US market is. It really is the most competetive, and most smoothly functioning market in the world. That leads to two things: a race to the bottom in price, and a race to "barely good enough" in quality (to lower the price, naturally). The European markets just can't compare.
Also, I think Europeans underestimate just how effective (or affordable) the American service market (and now, I guess, the Indian/Egypt/Whatever service market) is. In Europe, a businessman won't hire people unless he has to, because people require lots of payroll taxes, and once hired, it's really hard to get rid of people. In the US, you hire ideally ahead of the curve, because payroll taxes are very low, and laying off employees if you don't need them is, in most states, fairly straightforward.
The sales tax in the US (which is actually very similar to the VAT in Europe, even though it's not called a VAT) is also generally significantly lower, no matter how much people complain about it. I guess the reason is that, here, the sales tax is added after the price tag -- in Europe, the price tag includes the sales tax.
This highly streamlined economy does lead to lower prices overall, and a greater shared wealth overall; I'm pretty sure that most economists would agree. Hence, I think this is one reason why prices abroad for US products are generally more expensive. I believe there's also the problem of the extra middle hand -- the company that would sell stuff to you in the US, often has to go through a third party abroad, for legal, culture and language reasons; that additional company will add additional cost (because they won't work for free).
How much does this have to do with how pricing is set for Xbox Live!, consoles, and services in the US versus elsewhere? I don't know, but I'd be surprised if it didn't play into it at all. And for all the politically active people out there: I describe why economics makes things and services originated in the US cheaper to buy in the US. I don't make any claim about whether low price of goods is the best possible goal for a society. If anyone makes a political comment (as opposed to discussing the price of CC), the thread will probably be edited and closed. There are better forums for such things :-)
But, yeah, if you want cheaper prices, move to the US. That's true for potato chips, gasoline, labor, and pretty much everything else from what I've been able to ascertain. So why not Xbox?
Jon Watte, Direct3D MVP
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