Everybody Loves a Price War!

Okay, gamers. As you ride the wave of falling console prices, shout: "Wii!!"

Microsoft joined Sony in cutting the price of its top-of-the-line gaming hardware, announcing on Tuesday that it would cut the price of its Xbox 360 console by as much as $50.

The cut comes at a crucial time for hardware makers: The runup to the release of the year's most anticipated games.

Top of the list is Electronic Arts' Madden NFL '08, which goes on sale next week. High-profile game releases boost console sales, and Microsoft hopes that whacking down the price of the 360 will help steal some business from Sony's Playstation 3 and Nintendo's Wii when the latest installment in the wildly successful Madden gaming franchise hits the shelves next week.

The move comes after a pair of whammies for Microsoft in July: the tech giant announced over $1 billion in costs associated with a major defect in the 360, while Sony cut prices by $100 to $500 for its high-end model of Playstation 3.

Microsoft's lower price tag on the 360 will set the console more squarely between its rivals.

The most popular version of the 360 will be down from $400 to $350, while the high-end model with a larger hard-drive will be reduced from $480 to $450. The less popular basic model, which lacks a hard-drive, will drop from $300 to $280.

Those prices compare with $499 for a Playstation 3's high-end model, and $250 for Nintendo's very hot-selling Wii. Nintendo's success with the less-sophisticated but less-expensive Wii has been a game-changing development in the console business.

In the year and a half since Microsoft launched the 360, the console hasn't quite lived up to expectations. It led PS3 in sales during the first half of this year while trailing less expensive options like Nintendo's Wii and Sony's Playstation 2.

If everything goes according to plan, Microsoft picks up a bigger piece of the action, gamers pay less to play armchair football, everybody wins - everybody except Sony and Nintendo, of course.

by Liz Gunnison

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