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Microsoft Drops Xbox 360 Pricing Aug. 12

1 Aug, 2007 By: John Gaudiosi

Xbox 360 models are expected to get $20-$50 price cuts.

The rumors are true. Microsoft will slash the price of its next-generation hardware Aug. 12, just before EA Sports releases the newest Madden NFL 08 game to retail Aug. 14.

While Microsoft has not confirmed the new prices, a Circuit City flyer shows the new hardware pricing. The new flyer shows the 120GB Elite Xbox 360 getting a $30 price cut to $450, while the 20GB Pro Xbox 360 will get a $50 cut to $350 and the Core model will be reduced $20 to $280. This new price will go into effect nationwide Aug. 12, according to multiple sources.

It also looks like Circuit City will be bundling a free copy of Rockstar's Table Tennis, which retails for $40 separately, with the Pro model. This looks like it will be exclusive to this chain, but other chains may offer a free older Xbox 360 title with purchase as an incentive.

Michael Pachter, video game analyst for Wedbush Morgan Securities, believes the varying price cuts are due to the costs involved in each system. He said the Pro model received the biggest reduction because Microsoft is break-even on that console. The company loses money on the Core and Elite models, which is why they received a smaller reduction.

“There are a couple of good reasons for the timing,” said Pachter. ”First, I'm sure that Microsoft doesn't want to look ‘reactive,' so they were reluctant to cut in response to Sony's cuts. Second, they had the warranty issue to deal with, and I think they wanted to avoid the misperception that they were discounting defective merchandise.”

Pachter thinks that the impact of the Xbox 360 price cut on PS3 will be to slow the growth of PS3 sales from the 130% sales jump that Sony announced last week to something more reasonable, such as a 50% raise in sales.

“I don't see any impact on Wii sales until the channel is supplied, and that won't happen till early next year, if not later,” said Pachter.

HD Wii

Nintendo is riding the wave of success for its Wii, but it wasn't too long ago that Gamecube was a bust and rumors were rampant that the company may exit the hardware business. So while the company continues to sell out its motion-sensor device Pachter believes Nintendo will release a new high-definition Wii to the market within three years.

Pachter said that while the motion-sensor controls are great for attracting gamers now, putting Wii games next to high-definition visuals of Xbox 360 and PlayStation 3 will have an impact over the long haul. As a result, he believes Nintendo will introduce a high definition Wii successor that combines motion-sensor controls with true HD visuals.

Previously, Nintendo game creator Shigeru Miyamoto had said that it was possible that an HD Wii could be introduced in the future, but it would depend on the adoption rate of HDTVs across territories. Nintendo of America's senior vice president of marketing and corporate communications, George Harrison, also said at E3 that a Wii hardware revision was not out of the question.

Nintendo has redesigned its Game Boys over the years and even the current bestseller, Nintendo DS, was redesigned within a year to become the Nintendo DS Lite. Nintendo phased out the bulkier original.

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