In a widely anticipated move, Microsoft has reduced the retail price for its Xbox 360 video-game consoles by up to $50 in an effort to keep pace with similar moves by rival Sony.
As of Wednesday, the 20-Gbyte version of the Xbox 360 will carry a $349.99 price tag, and the basic Core system will sell for $279.99, representing $50 price cuts for both models. The high-end, 120-Gbyte Xbox 360 Elite system will retail for $449.99 -- a $30 reduction.
Microsoft also said it will debut in September a special Halo 3 edition of Xbox 360 priced at $399.99 and featuring a Spartan green-and-gold finish with matching wireless controller.
Sony last month cut the price of its 60-Gbyte PlayStation 3 by $100, to $499. The Japanese electronics maker also introduced an 80-Gbyte version priced at $599. To date, Nintendo has held firm on pricing for its new Wii video game system, but could now be forced to make a move.
Microsoft said it timed the price cuts to roughly coincide with next week's launch of EA Sports' Madden NFL '08 video football game.
The company is counting on the release of new games to help reverse the fortunes of its troubled Xbox franchise. Microsoft said it shipped 700,000 Xbox 360 units during its most recent quarter, compared to 1.8 million in the fiscal fourth quarter of 2006 -- a fall off of 61%.
Microsoft's Xbox operations are housed within the company's entertainment and devices division. The group saw fourth-quarter revenue drop 10% year-over-year to $1.16 billion on an operating loss of $1.2 billion. The group lost $423 million the previous year.
Microsoft blamed the 183% increase in the EDD operating loss on a $1.06 billion charge against earnings that the company incurred to cover the cost of extending the warranty period for the Xbox 360 to three years.
The move came following Microsoft's recent admission that the gaming system was suffering from an "unacceptable" number of general hardware failures.
Microsoft has also been hit with a handful of class-action suits in recent weeks claiming that a design flaw in the Xbox 360 causes the system to irreparably scratch game discs. Microsoft has denied the claim.