Microsoft sets Xbox 360 pricing at up to $399
Wed Aug 17, 8:44 PM ET
Microsoft Corp. (Nasdaq:MSFT - news) on Wednesday said its new Xbox 360 would sell for as much as $399 in the United States, the most expensive mainstream video game console launch yet.
The move raises the financial stakes in Microsoft's war with Sony Corp. (6758.T), which plans next year to launch its own new console, the PlayStation 3.
The two companies already dominate the $25 billion video game hardware and software market and are expected to try to make their consoles hubs of digital home entertainment.
The $399 Xbox 360 bundle includes a wireless controller, a headset and a detachable hard drive that lets the console play games made for the original Xbox and play particularly sophisticated games, such as some role-playing titles.
Microsoft also will offer a $299 Xbox 360 "Core System," which includes a wired controller, but analysts expect early buyers to choose the pricier model.
A November launch is widely expected for the software giant's new console. That would give it a head start against Sony's PlayStation 3 and smaller rival Nintendo Co. Ltd's (7974.OS) next-generation Revolution console -- both due in 2006.
Current versions of the Xbox and PlayStation play music and movies. New versions will have more advanced graphics and high-speed Internet connections -- improving features such as online game play and chat.
Price has not historically been a hurdle for hard-core gamers, who are expected to be the first buyers of the Xbox 360 and will want to use the console to play games they already own.
"By definition early adopters aren't price conscious," said Wedbush Morgan Securities analyst Michael Pachter.
The new console will launch simultaneously in the U.S., Japan and Europe ahead of the holiday season, Microsoft said.
The Xbox 360 Core System will sell for 299 euros in Europe and 209 pounds in Britain. The higher-priced version would be 399 euros and 279 pounds, European home and entertainment head Chris Lewis told journalists at Europe's biggest computer games fair in Leipzig, Germany.
The company said it would unveil pricing for the Japanese market at the Tokyo Game Show next month.
COMING PRICE WAR
At its November 2001 U.S. debut, the price on the Xbox was $299. The following May, Microsoft slashed the price to $199. The console now lists at $149.
Wedbush Morgan's Pachter said Microsoft's Xbox 360 pricing gives the company room for price cuts should Sony price its PS3 competitively.
Analysts expect the PS3, which Sony said will have twice the processing speed of the new Xbox, to sell for $399 or
Sony's game unit boss Ken Kutaragi has not given pricing details for the much-anticipated game player, but has often hinted that its price will be high -- even going so far as to say that the company's aim is to make the PS3 so good that people would work overtime to buy it.
Sony launched the PS2 in October 2000 with a U.S. retail price of $299, beating the Xbox and Nintendo GameCube to the market by over a year.
The PS2 has outsold the Xbox by nearly 4-to-1 since, and this time Microsoft is determined to beat Sony to market.
Microsoft has declined to give sales targets for the Xbox 360 or to say how many would be available at launch. Thus far, Microsoft has sold about 22 million Xboxes -- giving the company around one-sixth of the installed base of games consoles globally.