By Chris Nuttall in San Francisco
Published: September 5 2008 03:00 | Last updated: September 5 2008 03:00
Microsoft is cutting the price of its Xbox 360 from today in the US, undercutting Nintendo's Wii and offering the cheapest next-generation console. Its move comes ahead of the crucial holiday sales season and follows a third-place finish in the latest US monthly sales figures, behind the Wii and Sony's Play-Station 3.
Microsoft also announced a price cut of about 30 per cent for the Xbox in Japan this week. Sales have been slow there and the console has badly trailed its Sony and Nintendo rivals. Microsoft said it would cut the price of the basic 360 Arcade console, which does not feature a hard drive, by 29 per cent - from $279.99 to $199.99 - from today in the US. This will undercut the Wii, which has sold for $249.99 since its launch.
Its console with a 60Gb hard drive will retail for $299.99 - a cut of $50, making it $100 cheaper than a comparable PlayStation 3, but without its Blu-ray drive and wi-fi capabilities. Its top model, the Xbox 360 Elite, with a 120Gb hard drive, will be $399.
Microsoft had a year's head start in launching the 360 ahead of the Wii and PS3, but it was overtaken in June in the US, when the NPD research firm reported Nintendo had sold 10.9m Wiis to date. In July, the Wii sold 555,000 units, compared with 225,000 PS3s and 205,000 360s.
"They needed to do something," said Michael Pachter, a video game analyst at Wedbush Morgan Securities.
"What has prompted this is relatively lacklustre sales. They can afford a price cut, as they've [falling] production costs that are probably close enough to these new prices."
In Japan, where Microsoft cut the Xbox price this week, the leader in games consoles is Nintendo's Wii.
Only a fraction of those Xbox 360s have been sold in Japan, where Microsoft lags behind Nintendo and Sony.
Microsoft said history had shown that more than 75 per cent of all console sales occur-red after the price fell below $200. "I really think that $199 is a magic price point," Mr Pachter said.
Microsoft has given no indication that it will follow suit with a price cut in Europe.
Aaron Greenberg, director of Xbox 360 product management, told the Financial Times: "We dropped the price in Europe in April. We feel good about maintaining our lead there."
www.ft.com/it
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