Microsoft cuts price of Xbox [05/15/02]

In a not-so-surprising move, Microsoft has announced the price drop of the Xbox from $299 to $199. The price drop had been rumored for at least a week now as Microsoft apparently was working with retailers to unveil the price drop. Also announced were price drops in Canada (to $299.99 CAN) and Japan (24,800 yen). This move is of no surprise as Sony made a surprise move the day before with it's own price slash of the PS2.

John O'Rourke, director of Xbox marketing, stated the following: "As part of our long-term strategy to broaden the reach of Xbox and make it accessible to more consumers, we've been working for several weeks with our key partners to make this announcement as seamless and high impact as possible."

O'Rourke also confirmed that the price cut had been planned for E3. "The traditional forum for making an announcement of this magnitude is the Electronic Entertainment Expo (E3) next week, but we've been ready to go for some time and can easily put this in place at retail now. We see no reason why eager gamers should have to wait a week to benefit from this tremendous value opportunity."

David Hufford, Xbox product manager, had this to say: "We want to make the Xbox more accessible to more people. That's why we're dropping the price. $199 is the sweet spot for a lot of gamers. It's about making it more accessible to more people. We're all at a 199 bucks, so now it comes down to value. You've got a lightweight, a middleweight, and a heavyweight in the ring right now--with the little guy being Nintendo. Their online announcement could not have been more feeble. It's a cop-out to just announce a component and a game. If you're taking online seriously, you need to enter with a little more force than that. Approaching online from a service standpoint--that's the way gamers want online delivered to them. Microsoft understands that. I think Sony is obviously the middleweight. They've got more power than the little guy. They've announced some games but don't seem to have a clear direction yet. I'd certainly put us in a strong position going forward. We'll be packing some serious heat moving forward, with some great games you'll hear about at E3."

Since Sony had already dropped the price of peripherals and first-party games, one wonders if Microsoft will follow suit. Also, this leaves Nintendo as the only one of the three console developers to have not brought out a price cut, leaving all three consoles at $199.99 each.

- - Kinderfeld

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