Home video game console prices reach equilibrium with Xbox 360 drop

Just over a week after Sony debuted its $299, 120 GB PlayStation 3 Slim, Microsoft this morning officially announced that its 120 GB Xbox 360 Elite system will drop to exactly the same price tomorrow.

With that, the seventh generation of home video game consoles looks to finally be able to settle down.

This cut brings the Nintendo Wii, PlayStation 3, and Xbox 360 closer together in price than they have been since they began competing with each other in 2005. Both Microsoft and Sony will continue to offer their own respective outlying models, though. Microsoft offers the cheapest console (the Xbox 360 Arcade for $199 with no hard drive) and Sony offers the console with the most onboard storage (the 160 GB "fat" PlayStation 3 for $399.)

Sony Computer Entertainment of America President and CEO Jack Tretton said last week that $299 is really the "sweet spot" for home video game consoles.

The original Xbox, as well as the first and second PlayStation consoles actually launched at that price. Nintendo, however, traditionally enters the market at a lower price point than its competitors. The Nintendo 64 and Gamecube, for example, both launched at $199.

With the element of cost almost entirely removed from the consumer's end as a purchasing determinant, the consoles can now compete solely on the basis of the benefits they offer the gamer...and the games.