Microsoft reveals Xbox 360 pricing

Microsoft is announcing today that it will sell two versions of its next-generation Xbox 360 video-game console, priced at $299 and $399.

The highly anticipated console is expected to go on sale in November, which would make it the first of the generation to market in Microsoft's rivalry with Sony and Nintendo. Microsoft has not announced a specific launch date.

The higher-priced version of the console is expected to have a 20-gigabyte detachable hard drive, which could be used to store digital songs and photos and saved game components. Those who buy the lower-priced version, the Xbox 360 "core system," could buy the hard drive separately for $100.

Microsoft has never sold a game console for so much money. The original Xbox launched in the United States in late 2001 for $299.

The company is clearly hoping to push people to shell out the extra $100 for the premium version and has included in that package a wireless controller, headset, remote control and "signature metallic finish."

The cheaper version will have a wired controller and none of the other features. Microsoft is announcing the prices today at the German Games Convention in Leipzig, Germany.

The pricing structure had been widely expected. Anthony Gikas, an analyst at Piper Jaffray, said in a note earlier this month that games for the system would likely sell for about $60.

Gikas also predicted Microsoft would ship 1 million consoles this year in the United States, 400,000 in Europe and 200,000 in Japan. Other analysts have predicted higher shipments.

Microsoft would not disclose its estimated console shipments for the year.

The hard drive isn't necessary to play most games but might be needed for the occasional online role-playing title that could have more demanding storage requirements, Xbox executive Mitchell Koch said yesterday.

The role-playing game "Final Fantasy XI," for example, debuted for the PlayStation 2 in 2003 with a 40-gigabyte hard drive that allowed users to download game levels and other features from the Internet.

The hard drive will be needed, Koch said, to play games made for the original Xbox that Microsoft is tweaking to be playable on the Xbox 360. The company has said some, but not all, of its best-selling games will be reworked to be played on the Xbox 360.

Microsoft is asking its developers to make games that can be played on either version of the console. Without a hard drive, players likely will need to buy a smaller-capacity memory unit — a standard accessory for game systems — to save games.

Jeetil Patel, an analyst covering the industry for Deutsche Bank Securities, said he expected the $399 version to be more popular than the $299 one, at least in the beginning when early-adopter gaming fans rush to stores.

"We do think it's going to be a fairly successful launch for Microsoft," Patel said. The company has a better supply and variety of games coming out for the system than it did with the original Xbox console, he added.

But the real industry showdown, he said, probably will occur during the 2006 holiday season, after Sony launches its PlayStation 3 console. Nintendo also is expected to debut its console, code-named "Revolution," next year.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com