Microsoft Lowers Xbox 360 Price by $50

Responding to pressure from Sony and the Nintendo Wii, Microsoft is lowering the price of Xbox 360 systems by $50 effective August 8, 2007.

Microsoft has made it official: the company has taken $50 off the price of the base Xbox 360 console. Effective August 8, 2007, the estimated retail price of the base Xbox 360 console with a 20 GB hard drive will drop to $349.99. Microsoft’s hard drive-free Xbox 360 Core system will get a $20 price drop to $279.99, while the high-end Xbox 360 Elite with a 120 GB hard drive will see its price lowered $30 to $449.99.

Widely rumored beginning last last month, the price drop surprises almost nobody and falls just before the retail release of Electronic Arts’ Madden NFL 08, the latest installment in the top-selling video game football franchise, on August 14. The announcement also marks the first significant price shift in the Xbox 360 console since it was introduced in late 2005.

“The fact that we have been able to keep our launch price longer than any other console while retaining our leadership position demonstrates that consumers believe in the value of Xbox 360,” said Mitch Koch, corporate VP of Microsoft’s Global Retail Sales and Marketing Group, in a release. “On the eve of the best holiday games lineup ever and the launch of Madden NFL 08, there has never been a better time to jump into Xbox 360.”

The move is widely seen as an effort to increase the appeal of the Xbox 360 console as Microsoft begins to gear up for the holiday season. While Sony has just introduced an 80 GB version of the PlayStation 3, it has taken $100 off the price tags of exiting 60 GB consoles to spur sales. However, both consoles are struggling to compete with the success of the less-expensive Nintendo Wii, which—with its low price tag, innovative controller, and games that appeal outside the traditional gamer demographic—has proven to be a runaway success. However, the price of gaming consoles isn’t typically a deciding factor in a system’s success: that falls to the games, and Microsoft is betting heavily that the upcoming Halo 3 will propel the Xbox 360 to new sales heights—particularly since the company recently had to set aside more than $1 billion to cover the costs of extending the Xbox 360 warranty to three years.

Although unconfirmed at this time, Microsoft also apparently plans to begin introducing updated Xbox 360 hardware at the same time it rolls out the $50 price cut: according to report, Xbox 360 Core units will remain unchanged, but the so-called “premium” edition Xbox 360s will acquire an HDMI port, use a quieter DVD drive, and incorporate 65 nm processor technology to reduce heat. These changes would seem to include modifications Microsoft is making to improve Xbox 360 reliability, since quality issues recently forced the company to extend warranty coverage to three years. There’s no word on what sort of HDMI Microsoft will be supporting; Xbox 360 Elite and the forthcoming Halo special edition already offer HDMI connectivity.