Microsoft dismisses talk of Xbox price cut as Sony turns up heat

Microsoft has refused to blink in the video game console war with Sony, revealing that it will rely on exciting new games such as the third instalment of "Halo" to boost sales of its Xbox 360 rather than entering a price war with its rival.

Sony slashed the cost of its advanced PlayStation 3 console this week in the US by $100 (£49), a move that turned up the heat on Microsoft. Yet Microsoft has refused to take the bait and has instead unveiled a "Spartan Green" version of the Xbox 360 to accompany the highly anticipated "Halo" game. The decision to maintain its pricing structure comes despite the company missing its target for 12 million global console shipments by the end of June after it reported it had sold 11.6 million units thus far.

Shane Kim, the head of Microsoft Games Studios, said: "We have no desire, no need, to react to anything the competition has done... We feel really great about the Xbox 360 right now."

Microsoft has sold nearly six million Xbox 360 consoles in the US, although it was released much earlier than the latest incarnation of the PlayStation that has achieved a disappointing 1.4 million sales in the region. Sony has suffered as a result of Nintendo's Wii console that has shifted 2.8 million units since its launch last year.

Mr Kim said the new version of "Halo", the violent science fiction action game that has proved a hit around the world, as well as the fourth version of the "Grand Theft Auto" series would continue to drive sales of the Xbox 360. "Halo" is available only on the Microsoft console as the software giant owns Bungie Studios, the game's developer.

Some analysts said Microsoft's decision not to slash the price of its console could reflect the software company's desire to turn a profit on its video game division.