Microsoft cuts Xbox 360 console price

Microsoft has cut the price of its flagship Xbox 360 console to just £200 while raising the cost of the cheaper model to £160.

From tomorrow the Xbox 360 Elite model, which includes a 120GB hard disk and headset, will fall by £30 to £199.99. The price cut seems likely to be motivated by Sony's new, cheaper version of its PlayStation 3 console, the PS3 slim, which will sell for £250 from Tuesday.

The cut brings the price of Microsoft's most expensive console closer than ever to that of Nintendo's Wii, which sells for £180.

However, Microsoft has also raised the price of the cheaper Xbox 360 Arcade console. This model, which has no hard disk, will now sell for £160.

Microsoft's Chris Lewis told the games industry publication MCV that this price rise was "partly to offset currency exchange rate fluctuations".

Competition between the three major console manufacturers has been fierce, with both Microsoft and Sony lagging behind the Nintendo Wii in UK sales. In July Nintendo had sold 5.4 million Wii consoles, with Microsoft's Xbox 360 at 3.9 million and Sony's PlayStation 3 lagging behind at 2.2 million.

Nintendo's DS handheld console is, to date, the biggest-selling console of this generation.