Microsoft is cutting the US price of its Xbox 360 gaming consoles. The move will mean that the basic model will cost $199 cheaper than the best-selling Nintendo Wii. It said that prices for the other Xbox models will drop by $50.

The cut also means that the entry level Xbox 360 is about half the recommended price of a PlayStation 3. The US cut follows a similar move in Japan. Microsoft said it had no plans to lower European prices further as according to Microsoft Pricing is handled on a region-by-region basis

The price cut comes into effect on 5 September. Microsoft said it wanted the price of the basic model to dip below the psychologically important barrier of $200. About 75% of all console sales have been made below that price point, Microsoft said. The $199 price applies only to the Xbox 360 Arcade which has a 256MB memory unit on board rather than a hard drive. Adding a 20GB hard drive could add up to $90 to the total cost.

In late August Microsoft announced that Japanese prices of the Xbox 360 would fall in September. The cut meant an Xbox Arcade will cost 19,800 yen ($182) also cheaper than the Wii.
In March Microsoft cut European prices which meant that the recommended price for the Arcade was £159.99. This is already lower than the European price for a Wii.

According to Analysts, Microsoft’s decision was made in an attempt to kick-start Xbox sales in the run-up to Christmas. In recent months consoles from rivals Sony and Nintendo have outsold it.