In an anticipated move, Microsoft has decided to cut the price of Xbox 360 not only in Japan, but in the United States as well.

Microsoft’s decision follows after another price cut was announced in July, before E3 Expo. So what we have here is the second price cut in less than two months. However, unlike what happened in July, now Microsoft has decided to play hard ball and really cut the price.

While in July Microsoft’s Xbox 360 Pro just went under $300 and the company unveiled a 60 GB Xbox 360 for $349, this time the Redmond giant is targeting Nintendo Wii.

Xbox Arcade, the Xbox version without hard drive and the main competitor of Nintendo Wii, will be sold for only $199.

But the Xbox Arcade is not the only version affected by the “slashing” fever. Microsoft also dropped the price of its Xbox 360 60 GB model from $349 to $299, while the high end model, Xbox 360 with 120 GB hard drive, will be $399 from $450.

Through these price cuts, Microsoft tries to achieve two goals: on one hand to boost the sales of its almost-two-year old gaming console and on the other hand to lure the casual gamers away from Nintendo Wii. Also, Microsoft hopes to catch up and surpass Sony’s PS3 in terms of monthly sales.  

However, I find it rather hard to believe that the price cuts alone will be enough to help Microsoft. Judging by recent history, Microsoft will have to do more than cut the price.
Last year Microsoft cut the price of its Xbox 360 right before the release of Halo 3. According to the figure released by the NPD Group, the price cut combined with the successful launch of Halo 3 doubled the sales of Xbox 360.
The game was released on September 25 and, during October, Microsoft sold 528,000 Xbox 350 and surpassed Nintendo’s Wii for the first time since the 2006 holiday season.
On the other hand, let’s take a look at more recent events. Surprisingly, the release of GTA IV has failed to boost the sales of the Xbox 360 and PS3, despite the marketing campaigns.
Therefore, it seems like just the best combination to boost the sales of a gaming console is the cutting price + good game title combo.

As for repositioning Xbox 360 as a casual gaming console, my guess is that Microsoft will have a little bit of a hard time. After two years, in which Microsoft’s marketing machine has promoted the gaming console as the ultimate device for hardcore gamers, it is hard to change this perception overnight.

On the other hand it will be interesting to see how the other two players, Nintendo and Sony, will react to Microsoft’s move.

In the past few months, Sony has unveiled a new version of its PS3, one with 80 GB hard drive, which will be sold for the same price as the high end version of Xbox 360: $399.

However, PS3 offers a Blu-Ray unit, which means a competitive edge over Microsoft’s device.

As for Nintendo, its officials have repeatedly stated that they have no intention to lower the price of Wii. And judging by the sales, they don’t have any reason to do so. But after Microsoft’s move, let’s see if Nintendo will not change its mind ahead of the holiday season.