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The Honolulu Advertiser
Posted on: Thursday, May 16, 2002

Move matches Playstation cut

By Anne D'Innocenzio
Associated Press

NEW YORK — The video-game console price war is playing into the hands of consumers.

Microsoft Corp. announced yesterday it is cutting the U.S. price of its Xbox video game console from $299 to $199, mirroring a move announced a day earlier by console leader Sony for its PlayStation2. Sony also lowered the price of the less advanced PS-1 console to $49 from $99.

Meanwhile, officials at Nintendo said they won't budge on the $199 price tag for GameCube. Nintendo executives believe the company's lineup of popular characters, from Mario to Pikachu, gives it an advantage over rivals.

But P.G. McNealy, an analyst at research firm Gartner G2, said it is only a matter of time before Nintendo lowers its price, too.

The timing of the price cuts from Sony, whose PlayStation2 was launched in North America back in October 2000, did not necessarily surprise analysts. It was the severity of the price cuts that was unexpected.

"This is our way of paring down to the next layer of the mass market," said Molly Smith, a spokeswoman at Sony.

Sony's original PlayStation, in stores in September 1995 at $299, was discounted in phases to $99 by August 1999.

Microsoft had originally planned to reduce the price on Xbox next week, but accelerated the move "to make sure nobody buys another video game system because of price," said John O'Rourke, director of global Xbox marketing.

Sony has been the leader in the market, shipping more than 30 million Playstation2 units worldwide since its introduction. World-wide Xbox sales have been slower than anticipated. Microsoft says it expects to have shipped 3.5 million to 4 million consoles by the end of June, below earlier estimates of 4.5 million to 6 million.

The other major player in the console market, Nintendo, has sold about 4 million of its GameCube units worldwide since its November 2001 introduction.