Microsoft Confirms 20 GB Xbox Price Cut And 60 GB Xbox Launch

Microsoft has confirmed the rumors of a $50 price cut to its 20 GB Xbox 360 model and also confirmed the launch of a 60 GB version of the gaming console.

The announcement by the Redmond, Washington- based technology giant comes two days before the start of the video game industry's biggest trade show, the Electronic Entertainment Expo or E3, which will be taking place in Los Angeles.

The 20 GB model of the Xbox 360 Pro would now be retailing for $299, down from the previous price tag of $349. However, Microsoft added that 20GB units have had their price cut "while supplies last," suggesting that the 20 GB model would no longer be manufactured and would soon become unavailable.

The possible Xbox 360 price cut was widely speculated on popular video game blogs and technology Web sites. Many websites had even posted snapshots of flyers from various retailers advertising the $299 price.

An upgraded Xbox 360 Pro model with 60 GB of memory is set to arrive in stores in early August to replace the 20 GB version of the gaming console. The 60 GB Xbox will carry a price tag of $349.

Microsoft explained the boost in memory capacity to people's interest in storing digital photos, video, music and other data on gaming consoles which are essentially entertainment computers connected to television sets.

Albert Penello, the director of product management of Xbox said, "We know consumers need more and more space to store the amazing digital content Xbox 360 offers, and we're giving it to them at no extra charge.”

Speculations are rife that Microsoft may also offer the service of streaming movies and TV episodes on the Xbox through a high-speed Internet service offering by Netflix Inc. The long-rumored deal could be announced on Monday at the E3 conference.

Meanwhile, Microsoft did not announce any price cuts for its more basic Xbox 360 Arcade version, which has 256 MB of storage and costs $280, or for the Xbox 360 Elite, a $450 model with a 120GB hard drive.

Microsoft had sold 10.3 million Xboxes in the U.S. as of the end of May, according to data from market researchers NPD Group. By comparison, Nintendo had sold 10.2 million Wii consoles, and Sony had sold 4.5 million PlayStation 3 machines.

However, U.S. sales of the Xbox 360 have lagged behind Nintendo’s Wii and the PlayStation 3 in the first five months of 2008, according to the NPD Group.

Sony has already announced that it has no plans to lower the prices of the PlayStation 3. A 40 GB version of the PlayStation 3 currently retails for $399. Nintendo’s Wii, which currently leads the race among the gaming consoles, is priced at $250.