The last price reduction was in July 2007, when Microsoft slashed the price from the original $199 to $179.

In January, the HD-DVD format, created and promoted by Microsoft’s partner, Toshiba, suffered a huge step-back after Warner Bros. Entertainment announced it would release its movies only in the Blu Ray format. However, Toshiba has tried to respond with important price cuts in all its HD DVD stand alone players.

As for Xbox 360, before CES 2008, there were rumors that Microsoft could unveil a new version of its gaming console, with an internal HD-DVD unit. Right before CES, Microsoft downplayed the rumors.

After Warner’s announcement and the apparent victory of Blu Ray, Microsoft did not completely rule out the possibility of releasing a Blu Ray unit for its gaming console.

"It should be consumer choice; and if that's the way they vote, that's something we'll have to consider," Albert Penello, group marketing manager for Xbox hardware said during CES, when asked whether Microsoft would support a Blu-ray DVD accessory in the event that HD-DVD failed.

The Blu Ray format was created by Sony, which has integrated Blu Ray units in its PlayStation 3.