Xbox cranks up price war campaign

Microsoft is slashing the cost of its Xbox games console, five weeks after its UK launch.

The computer giant confirmed yesterday it would drop the price from £299 to £199 - triggering a war with its two rivals, the Sony PlayStation 2 and Nintendo GameCube.

The price change takes effect on April 26 - a week before Nintendo launches its new GameCube console, which is expected to sell for between £150 and £160. Microsoft denied its decision was the result of poor sales, saying they had been 'in line with expectations'.

The £100 cut will anger people who have already bought the Xbox at its launch price. Existing customers are to be offered a free controller and two games, worth £115, in compensation.

A Microsoft spokesman said: 'We are very pleased with the Xbox - it has been phenomenal - but we don't want the price to be the obstacle to the Xbox experience.' Sony cut the price of its PS2, or PlayStation 2, from £299 to £199 just before Christmas.

Launched in November 2000, it has already sold about 18million worldwide, while games maker THQ estimates Microsoft has sold about 18million Xbox consoles.

Industry expert James Ashton-Tyl er said: 'A price cut so soon after launch is unprecedented but I don't think it's a panic measure. ' The Xbox is the first venture into the console market for Microsoft, which i s thought to be spending £350million on marketing alone.

The company was hit by negative publicity even before its European launch when the Japanese claimed machines scratched game discs.

A statement from Nintendo said it was not worried by the Xbox price cut: 'The GameCube has exactly the right proposition for success,' it said.