The game console price war is heating up as prices start heading down.
Microsoft Corp. said it would slash $100 off the price of its Xbox 360 Elite game console and phase out its smaller Xbox 360 Pro model, which has a hard drive that is half the size of the Elite's 120-gigabyte storage unit.
To help clear inventory for the discontinued Pro version, Microsoft said Wednesday that it would lop $50 off the price of the console, to $249, until retailers run out. Its Xbox 360 Arcade version, which does not have a built-in hard drive, remains at $199. The lower prices take effect Friday.
The move comes two weeks after Sony Corp. lowered the price of its PlayStation 3 console to $299 from $399. To promote the PS3, Sony is waging a costly marketing campaign before the crucial holiday shopping season to reposition the console as more of an all-in-one entertainment device that can play Blu-ray DVDs, download movies and TV episodes from the Internet and play video games.
Microsoft has sold more than 30 million Xbox 360s worldwide since it introduced the second-generation game console in November 2005. Sony has sold 24 million PS3 consoles in the same time, but Nintendo Co. has moved roughly 52 million Wii consoles since launching the device in November 2006 for $249. Only Nintendo has left the price tag for its consoles untouched.
"The pricing puts pressure on the Nintendo Wii and could force Nintendo to lower their price to $199," said Jesse Divnich, director of analyst services at Electronic Entertainment Design & Research in Carlsbad, Calif.
Although the Wii is the dominant gaming platform, Divnich said efforts by Microsoft and Sony to beef up their catalogs of casual, downloadable games could eventually woo mainstream buyers away from Nintendo, which has seen sales of the Wii slip in recent months.
Who will win this price war? Consumers.
Although prices are unlikely to drift much below $200 in the coming years, Divnich said, manufacturers will start boosting features to give players more bang for their buck.