Japan has always been something of an oracle to the console market. While not a major market share, the country has always been looked to as a setter of trends in consoles and console games; therefore it is a great encouragement for a gaming console manufacturer if their products do well in Japan.

With 700 000 sold units, Microsoft’s Xbox 360 is severely lagging behind Sony’s PS3 with 2.3 million units or the Nintendo Wii’s massive 6.7 million. In an effort to counterbalance this, Microsoft’s Home & Entertainment Division general manager Takashi Sensui has announced major price drops for the 360 in Japan, and the introduction of a new model for the Japanese market earlier today at a media conference in Tokyo.

As of September 11, Xbox 360 prices in Japan will drop from 47,800 ($442) to 39,800 yen ($368) for the Elite 120 GB model, 34, 800 ($321) to 29,800 yen ($275) for the newly introduced 60GB model, and the Arcade model will drop from 27,800 yen ($257) to 19,800 yen ($183). Price cuts similar in scope are also rumored to be on the way for the U.S. market, according to 1up.

Despite a significant growth in sales due to games like Tales of Vesperia and high hopes for the upcoming Square Enix RPG titles Infinite Undiscovery, The Last Remnant, and Star Ocean: The Last Hope, Microsoft console sales in the Land of the Rising Sun have been “relatively stagnant” in comparison with competing companies, according to Michael Patcher, analyst at Wedbush Morgan. Hopefully for Microsoft, the up and coming price reductions will mitigate this effect.