Xbox price drop for Japan

Microsoft today announced that it will cut the price of its Xbox console in Japan by more than 30 percent. The price cut will take effect on November 20. The drop from 24,800 (US$228) yen to 16,800 yen (US$155) will make the Xbox less expensive than the PlayStation 2, which, from November 13, will sell for 19,800 yen (US$182), but the Microsoft console will still cost Japanese gamers more than Nintendo's 14,000 yen (US$129) GameCube.

November 20 will also see Microsoft releasing a new Japanese Xbox bundle comprising a console, two controllers, a DVD movie playback kit, copies of Halo and Project Gotham Racing 2, and two months of free access to Xbox Live. The new bundle will be available for a limited period only and will sell for 19,800 yen (US$182). Microsoft has also announced that it will be distributing free copies of its Xbox Music Mixer to Japanese gamers via gaming magazines beginning November 29.

The Xbox price cut is a clear attempt by Microsoft to claim a larger share of the Japanese console market. At the end of June 2003, Japanese consumers had purchased only 450,000 Xboxes, compared to 13.6 million PS2s.

Microsoft couldn't have picked a better time to make its move: After several quarters of disappointing results, Sony is in no position to engage in a price war with deep-pocketed Microsoft. The need to support the PSX launch and its ongoing--and expensive--CELL research will further hamper Sony's ability to respond.

Meanwhile, initial reactions to the price cut in the Japanese gaming community were positive, with general agreement that both the new price for the console and the new bundle are very attractive. This price cut may be just what Microsoft needs to bring its Japanese console market share a little bit closer to its share in the US and European markets.