Microsoft announced that starting tomorrow, it would begin selling its Xbox 360 console at a lower price point than the current sales champion Nintendo Wii. The Xbox 360 will see a price cut to $50 under the Wii’s $250 price, which has stayed the same since its initial launch, to hit the $200 sweet spot just in time for the holiday sale season. The $200 pricing is for Microsoft’s cheapest Xbox trim, the Arcade, but Pro and Elite versions will also see similar $50 price drops. This occurs just shortly after the Xbox 360 received similar price cuts in Japan where it has been seeing poor sales.

“Microsoft wants to drum up demand for the holiday. Microsoft’s long-term vision for the Xbox is not to turn a profit today,” said Toan Tran, analyst with Morningstar. “It’s a way to get a foothold into people’s living rooms.”

That sounds a lot like Microsoft back in 2001 when it introduced the first Xbox at a $5 billion loss. Fast forward seven years later and Microsoft’s still claiming to be playing the same game? I understand Microsoft has huge cash reserves but how long do they intend to be content with gaining a foothold at the cost of so much money? Must be hard for them to look at the less sophisticated but more innovative Wii make profit on every one of its 30 million hardware sales.

At any rate, Microsoft’s loss can only be our gain. As the holiday sales wars heat up, Sony and Nintendo both may have to consider similar price cuts to their own systems to stay competitive this season.

(source: xbox.com)

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