Microsoft Corp, which trails Sony Corp in video-game machine sales, said it will reduce the price of its unprofitable Xbox console in North America today, ahead of a reduction that analysts expect from Sony.
Xbox will cost US$149.99 in the US, a US$30 markdown, Microsoft said in a statement. The price in Canada will be reduced by C$30, to C$199, and in Mexico it will drop by the equivalent of US$45, to 1,999 pesos, the Redmond, Washington-based company said.
Microsoft aims to boost Xbox demand to rival Sony's PlayStation 2, which outsells Xbox 5 to 1 in the US$8 billion market for game systems. The unit that includes Xbox had a loss of almost US$2 billion in the past two fiscal years. Microsoft said last week it would simplify the Xbox programming software to encourage game makers to create more titles, and the company has said it will try to build the next Xbox version with cheaper parts to lower costs.
"It shows the kinds of resources Microsoft can use if it wants to get ahead in a market," Brendan Barnicle, who follows Microsoft at Pacific Crest Securities in Portland, Oregon, said of the Microsoft price cut preceding one by Sony for the first time.
In response, Sony said it will hold its price on the video-game machine after Microsoft said it will discount its rival Xbox in the US by 17 percent.
"We respond to market demand and have no plans for an immediate cut against the Xbox," said Nanako Kato, a spokeswoman for Sony Computer Entertainment Corp in Tokyo.
Sony may not need to respond until the Electronic Entertainment Exposition in Los Angeles, known as E3, in May because its bigger selection of game titles helps it woo customers, said Peter Boardman, who helps manage US$15 billion at NWQ Investment Management Co in Los Angeles.
"Xbox's lower price won't lead to greater demand because Sony has the titles to keep gamers," said Boardman, whose fund includes portable game console maker Nintendo Co.
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