Microsoft trims Xbox 360 price by $50

Computerworld - Microsoft Corp. late yesterday confirmed that it is dropping the price of the Xbox 360 video game console to $350, effective tomorrow.

Although rumors of the price cut had swirled since last week, Microsoft didn't make the deal official until late yesterday. Even then, the company did not tout the $50 cut as much as highlight how long it resisted discounting the machine. "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, a vice president in the entertainment division's sales and marketing group, in a statement.

Microsoft launched the Xbox 360 in November 2005 at a U.S. price of $400. Among Microsoft's console rivals, Sony Corp. cut the price of its PlayStation 3 by $100 in early July, about seven months after the console appeared. Nintendo, however, has not touched the suggested list of its $250 Wii since the box debuted to long lines late in 2006.

As of Wednesday, the standard Xbox 360 -- equipped with a 20GB hard drive -- will sell for $350, while the entry-level Core System bundle that features a console sans drive will be priced at $280, $20 less than before. Microsoft also dropped the price of the Xbox 360 Elite package, which features a 120GB drive and supports high definition, by $30 to $450, and announced a special edition Xbox 360 connected with the September launch of Halo 3 that will sell for $400.

Microsoft had been pestered about Xbox 360 price changes since Sony dropped the hammer on the PlayStation 3. In mid-July, however, Shane Kim, vice president at Microsoft Game Studios, said the company wasn't feeling any pressure to follow. Less than two weeks ago, during a conference call with financial analysts, Robbie Bach, the leader of the entertainment and devices division, said that Microsoft had a pricing plan in place, but wouldn't talk about its specifics or timing.

High hardware failure rates of the Xbox 360 forced Microsoft a month ago to take a charge against earnings of more than $1 billion to pay for repairs and replacement machines already sold or in inventory.

The price cut didn't do anything for Microsoft's stock price, which by midday had dipped $.34 to $29.20, a drop of just over 1%.

Related News and Discussion:

• Xbox 360 'red ring of death' costs Microsoft more than $1B
• Alex Scoble: More Sony PS3 woes: Microsoft releases Xbox 360 developer kit for the masses
• Daily IT Blogwatch: Can't Wii all just get along? (and a testy TSA tale)
• Shark Bait: PS3 makes a comeback; Xbox 360 sales down!
• Shark Bait: Xbox360 vs PS3 vs Wii

Read more about hardware in Computerworld's Hardware Knowledge Center.