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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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July 13, 2008 7:19 PM

E3: Microsoft cuts price on 20-gig Xbox 360, introduces new 60-gig model

Posted by Benjamin J. Romano

Microsoft today announced the Xbox 360 price cut that had been expected, but also announced a new 60-gigabyte model to hit stores in August.

The mid-line Xbox 360 Pro, with a 20-gigabyte hard drive, can now be had for $300 in the U.S. and Canada -- "while supplies last" -- down from $350.

In its place, Microsoft will sell a 60-gig Xbox 360 beginning in early August for $350.

The company made no adjustment to the rest of its line, including the Xbox 360 Arcade, with no hard drive, for $280 and the Xbox 360 Elite, with a 120-gig hard drive, for $450.

To me, this move looks more like an attack on Sony's PlayStation 3 than on the Nintendo Wii, which has been by far the best-selling console in recent months. By introducing a $350 console with a 60-gig hard drive, Microsoft now has a model that is less expensive (by $50) than the cheapest PlayStation 3, but also has more memory for downloading games and video. The 40-gig PlayStation 3 is $400. Sony's 80-gig model is $500.

The PS3 still holds the edge when it comes to playing high-definition DVDs. The new 60-gig Xbox 360 does not have a high-definition DVD player on board. Instead, Microsoft is touting the console's ability to play DVDs in "near high-definition using the upscaling capabilities of Xbox 360." The high-definition multimedia interface (HDMI) cable is sold separately.

It's not clear that high-def DVD playback is a big issue for hardcore gamers. But since the high-def format Microsoft was backing, HD-DVD, lost the next-generation format war, Microsoft has not made any moves toward Blu-ray.

Perhaps Microsoft will fire a salvo toward Nintendo at its press conference in Los Angeles tomorrow morning. Don Mattrick, senior vice president of Microsoft's Interactive Entertainment Business, is scheduled to take the stage as part of the event, which begins at 10:30 a.m.

Check back here for live coverage this week from the E3 Media and Business Summit.

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