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Analyst calls for "real" Xbox 360 price cut

Signal Hill sceptical of Microsoft's recent $50 reduction in face of increasing competition

Signal Hill analyst Todd Greenwald has said that "Xbox 360 needs a real price cut" in his latest note to investors.

Microsoft dropped the price of the 20GB console in the US by USD 50 last week prior to E3, but Greenwald believes the company needs to do more in the face of competition from the PlayStation 3 and Nintendo's Wii.

"We remain very sceptical of Microsoft's pricing strategy and competitive positioning versus the PlayStation 3.

"At USD 349, with a 60GB hard drive, we just don't think it is a compelling product compared with the PS3 at USD 399 with an 80GB hard drive (along with more processing horsepower, Blu-ray, Wifi, HDMI, and going forward, more exclusive content)," he offered.

"We'd also note that the Xbox 360 has just been surpassed by the Wii in the US, despite Microsoft's one year head start over Nintendo.

"We do think that the Netflix announcement is a significant addition for Xbox users, though its far more of a positive for Netflix than it is for Microsoft in our opinion," he added of the recently revealed streaming movie deal.

Greenwald pointed to Sony's introduction of the 80GB PS3 in the US at the same retail price as the 40GB unit, and a collection of exclusive titles, as reason why the PlayStation 3 is better positioned than the Xbox 360 for the first time since launch.

"Sony's biggest announcement was a strong counter-punch to Microsoft's USD 50 price cut on the 360.

"We think this should give Sony a leg up versus the 360, along with several exclusive titles like the just-released Metal Gear Solid, LittleBigPlanet, Resistance 2, Killzone 2, Gran Turismo 5, God of War 3, etc.

"Beyond Gears of War 2, Microsoft doesn't seem to have the same library of exclusive, must-have titles," he added.

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