Microsoft has slashed the price of its Xbox 360 games console in Australia by $100, as the company steps up its battle with the Nintendo Wii and seeks to expand beyond hardcore gamers.
The Xbox 360 Pro system has had its price cut from $649 to $579.95, while the trimmed-down Core version - which lacks a hard drive and wireless controllers - now sells for $100 less at $399.95, the same price as the Wii.
Microsoft's Xbox director for Australia and New Zealand, David McLean, said after leaving the console's price static for 17 months it was time for Microsoft to become more aggressive in its pricing strategy and expand the Xbox 360's appeal.
"Since launch we've always had a fairly deliberate strategy to secure the hardcore gamers first ... but now that we've done that job it's time to expand the market," McLean said in an interview.
But Microsoft isn't just attacking Nintendo on the price front. Later this year it plans to release a number of titles that allow for more social gaming experiences, a market the Wii and its intuitive motion-sensitive controllers has taken by storm.
Those titles include Guitar Hero III: Rock Legends, Rock Band and Dance Dance Revolution Universe.
"We are starting to see some of those real social gaming experiences and with the console at the right price point it should enable us to be somewhat more competitive," McLean said.
At the same time Microsoft will continue to cater to hardcore gamers with the release of Halo 3, Grand Theft Auto 4 and Call of Duty 4.
Halo 3, scheduled to debut worldwide on September 25, is shaping up to be one of the biggest game launches of the year. Analysts at Goldman-Sachs project the title will give Microsoft's loss-making gaming division its first profitable quarter.
Daniel Morse, games analyst at market watcher GfK, said he expected today's price cut and the impending release of Halo 3 would be a significant incentive for people to buy the Xbox 360 in the lead up to Christmas.
"You get a true next-generation device for the same price as the Wii and on top of that you can play Halo," Morse said.
But he insisted the Xbox 360 and Wii were "two very different products", and he did not expect Microsoft's move would spark a price war with Nintendo.
Yesterday, before Microsoft made the price cut announcement, a Nintendo Australia spokesman said there were no plans to adjust the price of the Wii as Nintendo was "still selling multitudes around the world" at the current price.
Sony has adopted a markedly different strategy with the Playstation 3, maintaining its $999 price and pitching it as an all-in-one home entertainment solution as opposed to a core gaming machine. In fact, the PS3 is sold in general consumer electronics stores which don't stock any games.
Today's Xbox 360 price cut will come as a surprise to some industry watchers because just last month Microsoft announced it expected to spend more than $US1 billion to repair widespread hardware problems facing the console.
But while McLean gave few details on the extent of the hardware problems in Australia, he said the price drop had long been factored into Microsoft's budgets.
"It's really a case of economies of scale allowing us to drop the price now as we improve the manufacturing process and make some savings there, and it's just the right thing to pass it on to the customer," he said.
The Xbox 360, Wii and Playstation 3 debuted in Australia in March last year, December last year and March this year, respectively.
Over their respective lives the consoles have sold 195,056, 138,192 and 66,503 units, according to GfK.
This year, the Nintendo DS handheld and the Sony Playstation 2 remain the top-selling games consoles so far, followed by the Wii, Playstation 3, Xbox 360 and PSP.
Morse said the Xbox 360 had done "very well given what its price point was", and added the DS and Playstation 2's sales dominance was largely due to their low $199 price tags.
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