Microsoft zaps the price of Xbox again

The US software giant Microsoft yesterday upped the ante in the computer games console market by dropping the price of its Xbox machine by 20 per cent – the third time it has cut the price in just over a year.

From today, Xbox will be on sale for £129.99 in the UK and €199.99 in the rest of Europe – a cut of about £30 and €50 respectively.

It is the third time Microsoft has slashed the price of the console since it was launched at £299 in March last year in an effort to eat into Sony's market share. The first price cut, of £100, came just a month after Xbox's launch and was followed by another, in September, which saw its price fall to about £160.

The latest cut could prompt action from the market leader Sony as well as Nintendo. By January, Sony had shipped about 50 million of its PlayStation 2 consoles while Microsoft had sold about 8 million Xboxes. Sony's PlayStation 2 currently sells for about £170, including a computer game, in the UK and for about €250 in Europe. Nintendo's GameCube machine, meanwhile, costs about £130 and €199.

"We had a great Christmas and firmly established ourselves as the number-two console player in this region," said Peter Moore, head of retail sales and marketing at Microsoft's home and entertainment arm. "We outsold some long-established competition and enjoyed near sell-out status, gaining market share along the way. This price change shows we are not content to rest on our laurels."