Xbox slashed to $199.99

Microsoft is to reduce the price of its Xbox video game system to $199.99 in the US and to 24,800 yen in Japan.

Microsoft is to reduce the price of its new Xbox video game system to $199.99 in the US. Microsoft also announced that it is reducing the price of the system in Japan to 24,800 yen, effective Wednesday, May 22.

Xbox was originally priced at $299.99 in the United States, $459.99 in Canada and 34,800 yen in Japan. Even at those prices, some industry analysts were expecting Microsoft to lose money on the gaming boxes as it attempted to build up an installed base of users.

The traditional forum for an announcement of this sort is next week’s E3 show, but it may have come earlier due to the heavy pressure Microsoft has been under from competitors Sony and Nintendo, vendors of the Playstation 2 and Gamecube systems, respectively. Those companies also recently announced price cuts of their systems – all now cost $199 in the US.

Microsoft says that it currently expects to ship 3.5 million to 4.0 million Xbox consoles for the fiscal year ending June 30, 2002.

Even so, it may have some way to go to catch up with market leader Sony, who, according to recent reports, have shipped 30 million units of the Playstation since its launch.

Nintendo too will prove to be tough competition. The Nintendo Gamecube unit has already sold several million units in Japan since its launch in addition to over 400,000 units in Europe in less than a month, two markets that Microsoft has failed to penetrate in a big way yet.