VIDEO GAMES: Microsoft will slash the price of its Xbox video games console by almost 200 just a month after the world's biggest software company introduced the product amid a blaze of media hype in Europe.
The firm, which manages the European distribution of the Xbox console from its Dublin operations centre, said the console would cost just €299 from April 26th, compared with the €479 launch price.
Microsoft refused to disclose Xbox sales figures in Europe yesterday as it announced third-quarter results, but analysts said sales had been slow to take off in Europe, where it was pitched at a far higher price than in the US.
Mr Chris Lewis, director for Xbox consumer business UK and Ireland, said he was pleased with Xbox's initial sales in Europe but the firm had decided to reduce its price to remain competitive.
He said Irish consumers who had already purchased an Xbox at the initial price would all be offered a "reward package". This will contain two free games and an extra controller for the console valued at about €187, slightly more than the price difference.
Microsoft has not reduced the price of the games console in either the US or Japanese markets.
The price cuts will take effect just a week before Nintendo introduces its new games console, the GameCube, in Europe. It will also make the Xbox competitive against its main rival, Sony's Playstation, which also costs €299 in the Irish market.
The three firms are slogging it out for control of the $20 billion (€22.5 billion) annual market for video games software. The high margins made from selling this software far outweigh the return from consoles.
Microsoft has invested billions in developing the Xbox console, which is intended to become the nucleus of a home entertainment system. The firm was already subsidising the consoles by about $100 before the price cuts were announced yesterday. But analysts believe the firm has decided to increase this subsidy rather than face the threat of games-development firms snubbing its new console and developing games solely for Sony.
Analysts broadly welcomed the price cut yesterday. "Finally, a good pricing move," said Mr Jeetil Patel, an analyst at Deutsche Banc Alex. Brown who covers the industry.
"Are they just playing catch-up with the market now? Yes," he added.
- Third-quarter profits at Microsoft fell short of expectations. The software giant recorded net profit of $2.74 billion, or 49 US cents a share, up 12 per cent on the year ago period.
The group's core business performed modestly with the figures boosted by the $847 million sale of its Expedia online travel unit.
Analysts had been looking for earnings of 51 US cents per share. Revenue was also on the shy side at $7.25 billion against forecasts of $7.34 billion, but higher than last year's $6.4 billion. - (Reuters)
