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Xbox Price Drop
May 15, 2002

Updated: Here's Microsoft's official press release regarding the price drop.  It's important to note that it confirms yet another drop in Japan next week, but still no word on whether accessories will be dropped or not.

Microsoft Reduces Xbox Price to $199.99 (U.S.)/$299.99 (CAN)


New Price Is Expected to Expand Market for World's Most Powerful Video Game Console

REDMOND, Wash. — May 15, 2002 — Through a carefully planned effort that includes the participation of key retailers and third-party publishers, Microsoft Corp. today unveiled its plans for a North American price reduction of the Xbox™ video game system. Effective immediately, Xbox will have an estimated retail price of $199.99 in the United States ($299.99 CAN). The price reduction will be supported by a multimillion dollar national merchandising and marketing campaign set to begin this weekend. Microsoft also announced it is reducing the price of Xbox in Japan to 24,800 yen effective Wednesday, May 22.*

Xbox was originally priced at $299.00 in the United States, $459.99 in Canada and 34,800 yen in Japan.

"As part of our long-term strategy to broaden the reach of Xbox and make it accessible to more consumers, we've been working for several weeks with our key partners to make this announcement as seamless and high impact as possible," said John O'Rourke, director of worldwide Xbox marketing at Microsoft.


With its cutting-edge technology, advanced graphics engine, hard disk drive and built-in Ethernet port, Xbox has been globally acknowledged as the most powerful video game console in the world. And with a rapidly expanding games portfolio featuring such titles as Game of the Year** "Halo™," Xbox has become the system of choice for millions of enthusiasts around the globe. "This new, lower price makes Xbox the best value among all competing video game systems," O'Rourke said. "The best box is now the best value."
O'Rourke acknowledged that speculation surrounding a pending price reduction of Xbox has been pervasive in the last few weeks. "The traditional forum for making an announcement of this magnitude is the Electronic Entertainment Expo (E3) next week, but we've been ready to go for some time and can easily put this in place at retail now. We see no reason why eager gamers should have to wait a week to benefit from this tremendous value opportunity."

"Xbox has been working closely with us to roll out this new pricing. We're confident the planned marketing and promotional support behind it will really drive store traffic and bring Xbox to the attention of a lot more gamers," said Dan DeMatteo, President, GameStop.
In just six short months since its highly successful North American launch, Xbox is experiencing a software attach rate of 4.1 in North America, the highest of any video game console ever. And recent momentum in Europe and Australia demonstrates strong consumer demand for Xbox.

Microsoft currently expects to ship 3.5 million to 4.0 million Xbox consoles for the fiscal year ending June 30, 2002. The company is not providing any update to financial guidance provided on April 18, 2002.

----------

In response to Sony's PS2 price drop yesterday, early this morning Microsoft dropped the price of its Xbox a full $100 to a new matching MSRP of $199.99.  While Microsoft hasn't officially announced the drop, most major online retailers (including Electronics Boutique and GameStop, although oddly not Amazon) have as of 1am EST begun selling the Xbox at $199.  Obviously they wouldn't be taking that kind of loss on the hardware unless the price drop was official, as there's no way retailers could make money off of the hardware under the old pricing structure.

It's important to note that as of yet no accessories have been reduced in price, whereas the PS2 saw massive cuts in controller and memory card prices as well.  The price drop isn't yet official, but we should have Microsoft's official word anytime now.

 


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