History does indeed repeat itself. Back in 2002, the console war was hotly contested and in April a price war was sparked when Nintendo boldy dropped the price of the GameCube to $399.95. The same week Microsoft dramatically dropped their price to $399.95 from its launch price of $649.95. It wasn’t until June of that year that Sony finally followed suit and also dropped their price to $399.95.
With the current console generation, the Nintendo Wii is the clear leader when it comes to price, mainly because they have never directly competed with Microsoft and Sony. Their console offers a different style of game play, a unique interface and games targeted at casual gamers. However, it seems that the Xbox 360 and Ps3 still want to be competitive and in order to pull market share away from Nintendo, both manufacturers needed to make a impact by dropping their price to make it a more attractive alternative to the Wii.
Despite repeated denials that they would consider a price drop, Sony recently announced the release of a redesigned PS3, increasing the hard drive space of the previous iteration and dropping the price to $499. Now today, Microsoft has hit back at the PS3 by also dropping the price of the Xbox 360. The Xbox 360 line up has been simplified with only two models now on offer. The Xbox 360 Elite has been dropped to $449 and the Xbox 360 arcade has been decreased to $299 bringing it in line with the Nintendo Wii pricing. This move is a two pronged attack on both Sony and Nintendo at the same time. PS3 will still be the most expensive console on the market and the Wii pricing no longer looks drastically lower than getting a 360.
Also, as a value added offer, Microsoft is including a copy of their upcoming Halo title – Halo3: ODST as a sweetener. They are also already hyping their Project Natal controller-free system claiming that both the Elite and Arcade versions will be compatible with Natal.
As the price war heats up, all eyes turn to Nintendo. The instigator of the 2002 price war, the company has sat back and let their competitors squabble over market share. Whether they will rest on their laurels and sit comfortably at the top or make more aggressive moves to secure their position with a Wii price drop remains unclear.
Also, if history is anything to go by, expect to see Sony announce the PS4 some time in the next six months. The Playstation 2 was announced just after the redesigned Playstation, the PSOne, was released. The Playstation 3 was announced just after the PS2 Slim came out. Now with the new PS3 due to hit soon, natural progression suggests a PS4 announcement in our near future. Only time will tell.