Microsoft Slashing Xbox 360 Prices, Sales To Soar? (MSFT)


How will Microsoft’s Xbox 360 compete with Nintendo’s innovative Wii and Sony’s Blu-ray equipped PS3? By being the cheapest of them all.

Microsoft is slashing $80 off the price of its cheapest Xbox, which means it’ll now sell for $199 — the cheapest current-generation game console. It’s also cutting $50 off its two higher-end units, which will sell for $299 with a 60-gigabyte hard drive and $399 with a 120-gigabyte hard drive.

Why cut prices now? The 360 is nearing its third birthday, and it’s recently been outsold by Sony’s more expensive PS3. So a significantly lower price should help Microsoft’s (MSFT) sales pick up again.

A Microsoft exec tells WSJ that about 75% of game hardware sales have typically happened after console makers drop prices below $200. Meanwhile, a GameStop exec tells BusinessWeek that he expects Xbox 360 sales to jump “anywhere from 1.5 times to three times current levels” as a result of the price cuts.

We don’t expect Sony’s (SNE) PS3 to cost $199 any time soon — that cheap Xbox doesn’t have a hard drive or a Blu-ray player, which Sony’s machine does. But it’s possible Nintendo (NTDOY) could whack $50 off the Wii’s $249 price tag this holiday season if sales show any signs of slowing.

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