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Wednesday, 15 May, 2002, 21:08 GMT 22:08 UK
Microsoft hits back in console war
Video game players
Video game players are enjoying console cost cuts
Microsoft has hit back in the escalating games console wars by slicing Xbox costs in North America and Japan.

Microsoft dropped the price of the Xbox to $200, from $300.

In Canada, the Xbox will cost 300 Canadian dollars (Can$), down from a previous price of Can$450, with the console set to cost 24,800 yen in Japan from next Wednesday, down from 34,800 yen.

The move follows Tuesday's announcement by Sony, the market leader, that it was dropping the price of its PlayStation 2 (PS2) console to $199 in the US, as part of a worldwide price slashing drive.

Nintendo cut the price of its GameCube unit two weeks before its European launch earlier this month.

'Carefully planned'

But Microsoft said its cuts were being implemented through a "carefully planned effort", rather than as a knee-jerk reaction to the cuts by rivals.

"We've been working for several weeks with our key partners to make this announcement as seamless and high impact as possible," said John O'Rourke, director of worldwide Xbox marketing at Microsoft.

The cuts will be backed by a multimillion dollar advertising campaign, Wednesday's statement added.

Early announcement

Microsoft a month ago reduced the price of the Xbox in Europe to, in the UK, 199 from 300.

The software giant reported a "surge" in sales following the cut, which came a little over a month after the console's European launch.

Mr O'Rourke said he acknowledged widespread speculation that Microsoft would repeat the price cuts in other markets.

"The traditional forum for making an announcement of this magnitude is the Electronic Entertainment Expo next week," he said.

Microsoft said it expected to ship 3.4-4.0 million Xbox consoles in the year ending 30 June.

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The BBC's John Moylan
"It was always going to be a huge gamble"
See also:

14 May 02 | New Media
Sony intensifies console war
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