The software giant said it is aiming for a broader audience with the machine, which now costs $179.99 in the United States, down from $199.
"Our commitment to the consumer is to offer the best system at the best price," Robbie Bach, senior vice president at Microsoft, said in a statement.
Some analysts didn't expect price cuts until the fall, when companies traditionally try to rev up sales as the holiday season approaches. Microsoft didn't mention the price cuts during a press conference Monday night, when it unveiled the first non-game application for the console. At the event, held in advance of this week's Electronic Entertainment Expo trade show in Los Angeles, the company introduced the Xbox Music Mixer, a $40 package of PC and Xbox software that will allow owners to transfer digital music and photos from their computers to the console's hard drive.
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