Microsoft drops Xbox price

The Xbox launched in the UK in March

Microsoft is slashing the price of its Xbox across the UK and Europe in an attempt to kick start sales.

The UK will see prices for the new computer console drop from £300 to £199.

The new price will match Sony's PlayStation 2, the market leader in Europe and in the rest of the world.

The Xbox launched amid great fanfare in the UK in March as excited fans queued to get their hands on the long-awaited machine.

But there have been mixed reports of its popularity, with some sectors reporting sluggish sales.

Targets

There are also concerns it is not selling well enough in Japan.

You cannot build a games business on just selling the consoles, the games are where the money is

James Ashton-Tyler

The company has been guarded about its sales figures, reporting only that 1.5 million were sold in the US to the end of 2001, having gone on sale in November.

Microsoft still believes it will meet its sales targets.

Japan is now the only country where the Xbox is sold at a higher price than the PlayStation 2, where it has struggled to make any impact on the market.

Inevitable

The Nintendo GameCube will launch itself into the crowded console market in Europe on 3 May, with a price tag of about £150.

Nintendo are confident the Xbox price cut will not harm their launch plans.

Sony's PlayStation 2 leads the market

A spokeswoman for Nintendo told BBC News Online: "GameCube has exactly the right proposition for success, a dedicated console, an excellent software line-up for launch and throughout 2002, plus the right price."

Official UK Xbox Magazine editor James Ashton-Tyler said the price cut was inevitable because most new consoles started off around the £300 mark and then dropped, including PlayStation 2.

"I'm not surprised the Xbox price has dropped but I am surprised to see it has been cut it so quickly," he said.

"There are two ways to look at the announcement: either as desperation by Microsoft or as a plan to get more Xboxes out there.

"This was a multi-million pound investment; it has to pay off and it must get Xboxes into people's homes.

"You cannot build a games business on just selling the consoles; the games are where the money is."

Microsoft's Sandy Duncan has said the price cut is part of the company's "long-term plans" for the console and is "good news" for consumers.

Thank you package

The price in Europe will now drop to 299 euros (£184) from 479 euros (£298).

The new price will be introduced on 26 April.

Those who bought the Xbox at the higher price have been promised a "thank you package", which will include two free games and an Xbox game controller.

Microsoft said people should check its Xbox website next week for further details.

Mr Ashton-Tyler believes the next stage in the console wars will be the introduction of online gaming and which company can make it a reality first.

It is expected both Sony and Microsoft will unveil plans at the E3 games conference being held in Los Angeles in May.