msnbc.com staff and news service reports
updated 9/3/2008 9:31:50 PM ET 2008-09-04T01:31:50

Microsoft Corp. is cutting the price of its Xbox 360 gaming console beginning Friday, with the cheapest version selling for $200, making it less expensive than the Nintendo Wii, which retails for $250.

(Msnbc.com is a joint Microsoft - NBC Universal venture.)

The Xbox 360 Arcade version had been selling for $280. Microsoft, which slashed the prices of the console in Japan on Monday, said the 60-gigabyte version of the console will now sell for $300, down from $350, and the high-end "Elite" 360 will go for $400, down from $450.

Microsoft has sold more than 20 million Xbox 360 consoles worldwide since its introduction in late 2005, compared with 14.4 million units for the PlayStation 3 and nearly 30 million Wii units since their debut in November 2006.

Although the entry-level, 250-megabyte console will sell for less than the Wii, Xbox product manager Aaron Greenberg hesitated to characterize the price move as an attempt to steal consumers away from Nintendo's best-selling game machine.

"The fact that we're now cheaper than the Wii will change the marketplace ... but we really believe that the Wii and the Xbox 360 are more complementary," he said. "We don't see people going into stores trying to decide between a Wii and an Xbox 360. We see that happening much more with the 360 and the PlayStation 3."

Sony Corp.'s 80-gigabyte PlayStation 3 console, which includes a Blu-ray player, sells for $400. Sony had cut the price of that console in July but said it had no plans to slash the price further this year.

Sony plans several big first-party game releases for the crucial holiday shopping season, including "LittleBigPlanet" and Resistance 2." The price cut by Microsoft is widely viewed as an attempt to stem any bump in console sales that its competitor might see as a result of these releases.

"Price cuts always help, but I still think the PlayStation 3 will have a better holiday because they have a very solid-looking title lineup," UBS analyst Ben Schachter wrote in an e-mail.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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