Microsoft slashing price of Xbox 360 model

20GB Pro will drop by $50, industry sources say

Microsoft will cut the price of its most popular Xbox 360 model, the 20GB Pro, by $50 to $299 in the coming weeks, game industry sources have confirmed.

Microsoft would not comment, but a major retailer, which requested anonymity, said the price move will come before the major video game trade show, E3, which runs July 15-17 in Los Angeles.

Microsoft last cut the price of the Xbox 360 Pro -- from $399 to $349 -- in August, in many ways setting the stage for the huge successful rollout of "Halo 3" the following month.

While Microsoft does not have a "Halo"-style blockbuster on the horizon this year, the company is trying to compete both with the Nintendo Wii for a family/casual gaming audience, while also fending off Sony's Blu-ray-equipped PlayStation 3 in the market-share battle for the more hardcore players.

David Cole, president of the market research firm DFC Intelligence, suggested a move by Microsoft had been expected, adding that he didn't think this cut would trigger an immediate spike in Xbox 360 hardware sales.

But the drop, which now positions the Xbox 360 Pro $100 less than Sony's 40GB PlayStation 3, will play a larger role during the holiday selling season, Cole said, noting, "Clearly, whenever you have a price decrease it puts pressure on the competing systems, because price is one of the major factors consumers consider when deciding which system to buy."

While Sony could be pondering its own price cut, the consumer electronics giant did note recently in an annual report that the PlayStation 3 has cost the company $3.3 billion since its late 2006 launch because of a strategic decision to sell the system for less than it costs to make.