Reuters - Microsoft cuts high-end Xbox price by 25 percent

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Microsoft cuts high-end Xbox price by 25 percent

Thursday, Aug 27, 2009 12:29PM UTC

By Gabriel Madway

SAN FRANCISCO (Reuters) - Microsoft Corp plans to slash the price of its high-end Xbox 360 video game console by $100, or 25 percent, stepping up the price war in the video game console market following a similar move by rival Sony Corp.

Effective Friday, Microsoft will drop the price of the Xbox 360 Elite to $299.99, just days after Sony cut the rival PlayStation 3 to $299.

Analysts have said that the cuts would put pressure on Nintendo Co Ltd to lower the price of its best-selling Wii console, but for now the company is not changing the price.

"We don't have such a plan," Nintendo spokesman Yasuhiro Minagawa said when asked if the company plans to cut prices on the Wii.

The Xbox is the No. 2 console in the U.S., behind the Wii, which sells for $249. But Xbox sales are up 17 percent in the U.S., the only console to show growth.

The price on the entry-level Xbox Arcade model will stay at $199.99, and Microsoft will phase out its mid-range Pro console, leaving it with two models. The Pro will sell for $249.99 until supplies run out.

Microsoft spokesman David Dennis said the price cut was in the works for some time, and was not a response to Sony's move, which was announced last week at the Gamescom video game trade show in Cologne, Germany.

Rather, Dennis said the price reduction would attract new buyers and help simplify its product mix for manufacturers and retailers as well as customers.

"It really makes the decision for consumers a lot easier," he said. "They're either price conscious and they gravitate toward the Arcade or they the want the full Xbox 360 experience."

Game publishers such as Activision Blizzard have been clamoring for console price cuts, which help boost sales of software.

The industry remains mired in a slump brought on by a lack of big-name releases and a recession that has pinched consumer spending.

Despite the slump, Hirokazu Hamamura, President of Japanese game magazine publisher Enterbrain Inc, says that Nintendo may resist a Wii price cut.

He suggests that the more powerful PlayStation 3 and Xbox 360 machines are not attractive to Wii shoppers, who enjoy a range of family and fitness-based games.

"The price cuts by itself won't stop people from buying Wiis. The users are too different," he said. "With Nintendo, the issue is not about the price so much as saturation and ability to grow in new markets."

Microsoft shares were down 8 cents to $24.47 in thin premarket trading.

(Additional reporting by Kiyoshi Takenaka and Mayumi Negishi in Tokyo, and Franklin Paul in New York; Editing by Phil Berlowitz and Derek Caney)