The price of the Xbox is being slashed from 拢299 to 拢199 with offers of free games to those who paid the higher price for the console as compensation. The new prices come into effect on April 26.
The March 14 launch of the Xbox in Europe was backed by a multimillion-pound advertising campaign through Bartle Bogle Hegarty, which urged people to play more.
The new lower price matches that of Sony's market leader PlayStation2, which was also first launched at the higher price of 拢299 before falling to 拢199. However, Sony waited months before it brought the price of its console down.
According to a Microsoft spokesman: "This is a long-term strategic move that will benefit our retail partners, our third-party publishing partners and ultimately the gamer."
Industry commentators say the price drop is the quickest of any major console launch. The price cut is seen as crucial to boosting sales as Microsoft tries to break into the $20bn (拢13.8bn) global game industry.
The launch, which has been backed by an estimated $500m in global marketing, has been a massive disappointment outside of the US and it has performed particularly poorly in the UK and Japan, where there are millions of PlayStation and PlayStation2 owners.
In the UK, it is estimated that Xbox has sold an estimated 60,000 to 70,000 units since its launch last month. Things are much worse in France and Germany, where sales are estimated to be 20,000 and as low as 12,000 respectively.
Microsoft has not said whether it was considering a similar price cut in Japan, where the Xbox sells for 34,800 yen (拢184) compared with the PS2, which sells for 29,800 yen (拢158).
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