Microsoft realized its Xbox 360 home console has few chances of competing with Nintendo's Wii and Sony's PS3 which are better equipped, and decided the only measure it could take in order to avoid a sale slump would be to lower prices. And it did.

Xbox 360 (the Arcade model) became the cheapest video game console of its generation as the software giant cut $80 off its price leaving it on the shelves at a price of $199 ($50 less than the top-selling Wii).  

Another 50 bucks were sliced off the price of the console’s two higher-end units which, from now on, will be available for $299 with a 60 GB hard drive (the mid-level Xbox 360 Pro) and $399 with a 120 GB hard drive (the Xbox 360 Elite).

Considering the fact that 75% of game hardware sales are usually being made after console producers are lowering prices bellow $200, Microsoft’s sales in the video games consoles segment should go up.

Sales of Xbox 360 should grow "anywhere from 1.5 times to three times current levels," according to a GameStop exec, BusinessWeek reported.  

Microsoft made similar price cut offs in Japan last month as sales there were beginning to slow down.

The battle for second place in sales across North America was between PlayStation 3 and the Xbox 360 this year, with Nintendo’s more innovative Wii clinching the No.1 spot.

However, Microsoft made the first move. Now, it’s up to Nintendo and Sony to lower prices.