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Following Sony's USD 100 price cut announcement, leading industry analyst Michael Pachter has gone on record predicting that Microsoft will quickly follow its rivals' lead and slash prices on all Xbox 360 models.

The Wedbush Morgan analyst expects the recently released Xbox 360 Elite to go from USD 479 to USD 399, the Premium model to see a drop from USD 399 to USD 349 and the Core system to be reduced from USD 299 to USD 249.

"We expect Microsoft to follow with a price cut of its own," said Pachter.

"Last week, Microsoft announced a slight Xbox 360 shipment shortfall and we do not believe that the company is prepared to allow Sony to erode its pricing advantage.

"We think that the console manufacturers will continue to cut price as their production costs come down, and expect sales to ramp significantly this holiday season," he added.

The company does not expect Nintendo to reduce the price of the Wii or DS, "as sales for both are still very strong and are anticipated to remain so through the end of the year."

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Game On
Nintendo Is Star of E3 Show as Rivals Scramble to Catch Up

By Mike Musgrove
Washington Post Staff Writer
Thursday, July 12, 2007; Page D01

SANTA MONICA, Calif., July 11 -- For many analysts and fans, Nintendo was something of an afterthought at the video game industry's annual E3 trade show in recent years.

But after a blockbuster launch of its Wii console and its ongoing dominance in the portable game market with its mobile DS handheld game console, the company that brought the world Mario and Zelda is now the company that others are trying to catch.

The annual Electronic Entertainment Expo, commonly known as E3, takes place this week in Santa Monica, Calif. The summit, which in the past has had tens-of-thousands of participants, was scaled back this year and is an opportunity for game makers and industry leaders to announce their latest technology and products.

Nintendo's competitors, meanwhile, are playing an expensive round of brinksmanship with each other to win back some of the attention. This week Sony cut the price on its PlayStation 3 console by $100. Microsoft recently announced an expanded warranty program for the Xbox 360 console, which could cost the company more than $1 billion.

Neither Microsoft nor Sony is making money in the game industry, since both are selling their consoles at below cost in their attempt to boost interest. Nintendo, meanwhile, which introduced the $249 Wii six months ago, can barely keep up with demand for the profitable product.

Microsoft and Sony even scaled back their annual parties at the E3 show. In years past, Microsoft held events at such glamorous Los Angeles venues as the Orpheum Theater, the Shrine Auditorium and Grauman's Chinese Theater. This year, its event was at a Santa Monica high school. Sony, which previously held events that featured such concert acts as Macy Gray and Beck, settled for a low-key sushi shindig this year.

Nintendo says it is not paying a lot of attention to Sony or Microsoft.

Reggie Fils-Aime, president of Nintendo of America, said the bigger question was how to get the non-gamers of the world interested in Nintendo systems.

"There are 24 hours in every day, and only a small time is available for leisure," he said at a news conference Wednesday. "We intend to steal more of that time for video games."

Fils-Aime, as expected, showed off some more Mario and Zelda game titles, the franchises for which Nintendo is most famous. His focus, however, was on how Nintendo products have won fans among senior citizens and women at levels well above the norm in the young-male-dominated industry.

For years, as the video game industry battled for dominance in the living room, the best graphics typically beat the competition. The popularity of the Wii's motion-detecting controllers has changed that notion, popularizing the life-like simulation of games, not their high-end computing aspect.

As a result, game companies are now trying to think of new ways to get players feeling like they are inside the game, designing realistic add-ons.

The Wii balance board, for example, lets players lean one way or another to control their game characters. The board is to be part of Wii Fit, the fitness program that Nintendo has in the works, illustrating that the "Wii workout" craze among those trying to get in shape by swinging fake rackets has only just begun.

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Neither Microsoft nor Sony is making money in the game industry, since both are selling their consoles at below cost in their attempt to boost interest. Nintendo, meanwhile, which introduced the $249 Wii six months ago, can barely keep up with demand for the profitable product.

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