Microsoft to sell Xbox 360 with larger hard drive

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Microsoft Corp. said Tuesday it will begin selling a new version of its Xbox 360 console that transmits high-definition video and comes with a larger hard drive in its latest effort to position the video game machine as a digital media hub.

Microsoft's new Xbox 360 Elite, with a 120-gigabyte hard drive and High Definition Multimedia Interface (HDMI) port, will be available on April 29 in the United States and Canada for $479.99.

The hard drive on the new machine is six times bigger than the current high-end Xbox 360 model, which retails for $399.

Microsoft said the Elite hard drive has space to hold a library of arcade games and thousands of songs, as well as high-definition TV shows and movies downloaded from the company's Xbox LIVE online service.

"Today's games and entertainment enthusiast has an insatiable appetite for digital high-definition content," said Peter Moore, corporate vice president for the Interactive Entertainment Business at Microsoft.

Microsoft said it will sell the Elite alongside existing Xbox 360 systems and it will offer the detachable 120 gigabyte hard drive for $179.99.

Microsoft released the Xbox 360 a full year ahead of Sony Corp.'s new PlayStation 3 and Nintendo Co. Ltd.'s Wii, grabbing an early lead in the new, three-way video game console war.

The Xbox 360 and PS3 are also battling on the home entertainment front with each shooting to take control of the digital living room.

Wedbush Morgan analyst Michael Pachter said Microsoft is making a play for a niche market.

"Very few consumers will care," he said, noting that most gamers can probably get by with a 20-gigabyte hard drive while owners of pricey high-definition televisions are still a small percentage of the overall audience.

Sony's PS3 includes a next-generation, high-definition, Blu-ray DVD player that is slowly gaining popularity with movie buffs. Microsoft did not put a competing high-def DVD player in its console, but with the Elite, the world's biggest software maker is making its own assault on the living room.

Microsoft Chairman Bill Gates said earlier this year it would offer an Xbox 360 that would double as a set-top box for Internet Protocol TV, or IPTV. Telephone carriers and cable companies provide set-top boxes to pipe high-definition movies and television into homes.

Executives at Sony, whose $600 high-end PS3 has racked up fewer sales than the Xbox 360 and Wii, said Microsoft's new console does not seem to address any consumer need.

"We're scratching our heads. They're fragmenting their product offering and fragmenting their consumer base," said Peter Dille, a Sony Computer Entertainment America senior vice president of marketing, who said Sony has no current plans to increase the size of its 60 gigabyte hard drive.
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