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Microsoft puts Sony, Nintendo on defensive

Time: 17:55 EST/22:55 GMT | News Source: Bloomberg | Posted By: Todd Richardson

Microsoft Corp may have achieved a coup by lowering the retail price of its Xbox video-game machine in Europe by a fifth, forcing rival console makers Sony Corp and Nintendo Co to follow, analysts say. Analysts say the price cut highlights Microsoft's desire to edge out Nintendo Co's GameCube console in Europe and solidify the No. 2 position behind Sony Corp's PlayStation 2. That Microsoft, which had a US$9 billion of profit in the 12 months ending last year, is the first game console maker to cut prices this year is also proof the company is committed to gaining more users, whatever the cost, analysts said.

"Last year, Sony outsmarted Microsoft by cutting prices first," said Soichiro Fukuda, an analyst with Nikko Citigroup in Tokyo. "It will be interesting to see how Sony responds."

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