Microsoft Reducing Xbox 360 Elite to $299.99

Microsoft may be officially dropping the price of the Xbox 360 Elite to $299.99 at the end of August. The Xbox 360 launched on November 22, 2005. It was the second video game system from Microsoft, who has to incur huge losses with the original Xbox due to the enormous expensive of starting a home gaming division against the likes of well established veterans like Nintendo and Sony. The Xbox 360 was the first high-definition video game system on the market.

As such, it wasn't a cheap system to produce. Microsoft also wanted to keep the Xbox 360 affordable at the same time. In the end, they come up with multiple SKUs for the Xbox 360 starting with Xbox 360 Core (which was later replaced by the Xbox 360 Arcade) and Xbox 360 Pro.

At a time when many were asking for Microsoft to drop the price of the Xbox 360, they instead introduce a more expensive model to add value to the system. The Xbox 360 Elite launched on April 29, 2007 for the expensive price tag of $479.99. The luxurious package includes a new black color for the Xbox 360 system, wireless controller and headset. Furthermore, you also get a HDMI cable in addition to 120 GB hard drive.

While it may be the best SKU on the Xbox 360, it was also the most expensive. As a result, Microsoft had to quickly reduce the price tag in order to keep the SKU selling. The Xbox 360 Elite went from $479.99 to $449.99 on August 8, 2007. Microsoft decided to cut the price again less than a year later and reduced the Xbox 360 Elite to $349.99 on September 4, 2008.

It looks like they will be dropping the price again one year later. Retail ads are showing that the Xbox 360 Elite is getting a new price tag at the end of August. It will go from $349.99 to $299.99. Furthermore, Microsoft will also discontinue the Xbox 360 Pro, which means there will only be two SKUs for the system: the Xbox 360 Arcade and Xbox 360 Elite.

The price drop coincides with the rumored launch date of the Playstation 3 Slim. The new model is cheaper to produce and will result in a price drop to the Playstation 3. Presumably, the Playstation 3 Slim will retail for $299.99.

It would be interesting to see how the Xbox 360 and Playstation 3 perform at retail during the rest of 2009. Both high-definition video game systems launched at high price tags. These price reductions should help spur hardware sales for the Xbox 360 and Playstation 3.