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Video Game Makers Cut Hardware Prices

Nintendo cut the price of its Gamecube video game system by $50 at last week’s Electronic Entertainment Expo (E3) show here, joining Sony Computer Entertainment (PlayStation2) and Microsoft (Xbox) which announced $100 price cuts in the days prior to the show.

The Gamecube is now $149 with Sony’s PlayStation2 and Microsoft Xbox at $199.

Microsoft’s and Sony’s price moves cut a full third of the previous $299 price tags for their respective game machines.

Sony went a step further by announcing a 50 percent price cut on the PlayStation1 console, which now retails for $49, and dropped the price of its memory cards and controllers (now $24.99 each), and the PlayStation One LCD bundle ($149.99). The company was also said to be considering price reductions on certain software titles.

Sony’s moves appeared to be a pre-emptive strike against Microsoft, which as widely expected announced its own $100 price cut on the Xbox console two days later.

Microsoft called its price cut “a carefully planned effort that included the participation of key retailers and third-party publishers.”

Microsoft said it has begun to support its price move with a multimillion dollar national merchandising and marketing campaign.

John O’Rourke, Microsoft Xbox worldwide marketing director, said the company is positioning Xbox as “the best value among all competing video game systems,” in part because it incorporates a hard disk drive and ethernet port, which are options for the Playstation2.

Microsoft said that in its six months on the market, Xbox has generated a 4.1 software attach rate in North America, and expects to ship 3.5 to 4 million consoles for the fiscal year ending June 30, 2002.

In early May, Sony announced it had sold more than 30 million PlayStation 2 units worldwide, which is almost 10 times the installed base of Microsoft’s Xbox.

Sony also outlined a plan to make the PlayStation 2 the centerpiece in a new home networking initiative, which includes online gaming. (See related story on p. 1.) The goal of the new company is to develop a “broadband network society,” made up of homes that are filled with Sony electronics components that link with each other and the Internet.