In keeping with its steady, worldwide price drops, Microsoft finally addressed its major market, North America, with significant price changes in preparation for this holiday season.
As of September 5, the price for the hard drive-less Xbox 360 Arcade unit will be $199, undercutting Nintendo's Wii by $50. The standard Xbox 360 and Xbox 360 Elite have been discounted to $299.99 and $399.99, respectively.
"Given the weaker consumer spending environment, the Xbox 360 should also now be in closer reach of more price-sensitive consumers," explained Lazard Capital Markets analyst Colin Sebastian to Gamasutra.
Microsoft points out that 75 percent of a console's sales occur once the system has reached the $200 point. Most notably, the Xbox 360 is now the cheapest console on the market for those opting out of the hard drive options.
Microsoft executive Aaron Greenberg told MTV Multiplayer that Microsoft's Core console is "complimentary" to the Wii, not a competitor.
"Our strategy all along has been to secure the core in our first couple of years, and I think we're done a great job doing that. We've always planned to broaden the reach to the masses, and we knew that having the games library, having the price point to do that is very important," he stated."
Attracting PlayStation 2 owners who are upgrading the this generation of hardware is more important to Microsoft than warring with the Wii.
"Tens of millions of those guys haven't upgraded yet. A lot of those guys didn't pay more than $200 bucks for their system and now we're speaking to those guys, as well," continued Greenberg. "I think we have a very compelling story for [PS2 owners] and there's a lot of very price-sensitive guys [that are] clearly a much larger audience than the Wii audience today. They [Sony] sold over 100 million consoles so there's got to be at a good least 80 million PS2 owners that haven't upgraded yet. From an addressable market standpoint, that would be the single largest addressable market for us."