Microsoft Cuts Xbox Price To Match Sony PS2

Microsoft is slashing the price of itsXbox videogame system in a move to compete with Sony’sindustry-leading PlayStation 2.

In a price war that is getting hotter by the minute, Microsoft said Wednesday that itwill slash Xbox prices in the United States from US$299 to $199. The $100 price cutmirrors Sony’s reduction announced Monday.

The price cuts come on the eve of the game industry’s Electronic Entertainment Expo, alsoknown as E3, in Los Angeles. It levels the cost of the three most popular video gameconsoles — PS2, Xbox and Nintendo’s GameCube — at$199.

MS Promotes Price Slashing

John O’Rourke, director of worldwide Xbox marketing at Microsoft, told the E-CommerceTimes that the price cut is part of the company’s long-term strategy to broaden theXbox’s reach and make it accessible to more consumers.

“Price reductions are part of being successful in this business,” O’Rourke said. “WithSony announcing their price reduction, we figured gamers shouldn’t have to wait anotherweek to buy an Xbox.”

Microsoft said the Xbox price reduction will be supported by a multimillion-dollarnational merchandising and marketing campaign set to begin this weekend.

No Surprise

Gartner Dataquest analyst Van Bakertold the E-Commerce Times that he is not surprised bySony’s and Microsoft’s price cuts. But will Microsoft’s reduction be effective?

“For Microsoft, it is not so much an issue of effectiveness as an issue ofmust-do in response to Sony,” said Baker. “But it will be effective for both of them.”

Xbox vs. PS2

Baker added that there is strong historical evidence that game platform sales volumesdramatically increase when prices fall below $200. He noted that the reduction shouldgive both players a boost.

Sony’s PS2 gained an early advantage with its 2000 debut; in contrast, Xbox launched justsix months ago. Sony is the clear-cut leader in the video game console market, shippingmore than 30 million PS2s to date.

Meanwhile, Microsoft said that it expects to have shipped 3.5 million to 4 million Xboxconsoles by the end of June, after initially estimating shipments of 4.5 million to 6million early this year.

Still, the Redmond, Washington-based giant is making some noise in the market. The Xboxis attracting video game enthusiasts, with about four game titles sold for each consolepurchased in North America. Xbox offers more than 70 titles.

Nintendo’s Play

Nintendo could not immediately be reached for comment, but the company reportedly has noplans to reduce the price of its GameCube system.

Analysts are divided on the question of whether Nintendo will follow suit with itsown price cuts.

Nintendo has reported about 4 million GameCube unit sales worldwide since the console’sintroduction last November.

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