Xbox follows PlayStation in dropping price

As Brian White blogged here on Monday, Microsoft (NASDAQ: MSFT)'s plans for the Xbox go far beyond a point-and-shoot platform, and today the company announced plans to drop the price of its units to drive more Xboxes into American households. Bloomberg.com reports that the vice president of Microsoft Game Studios, Shane Kim, dropped the bomb, but declined to tip the date or size of the price drop. It will come after this week's Nintendo E3 conference, though (which is being covered comprehensively by our sister blogs Engadget and Joystiq).

While Microsoft lost over $1 billion on Xboxes last year, the losses could be seen as the price of owning the central entertainment and internet link in millions of households. The company just added Disney titles to the streaming movie content already offered through Xbox Live. The pay service, which allows players to compete in real-time with opponents around the world, already has more than 7 million subscribers.

The decision could also be a reaction to Sony (NYSE: SNE)'s decision to drop the price of the PlayStation 3. Sony's platform has fallen badly behind the industry-changing Nintendo Wii, as well as the Xbox. Microsoft's move could also be seen as a sop to the multitude of game developers that have Xbox products in the pipeline or on the market.

Also read: Microsoft preps for holiday Xbox game launches - Brian White