Microsoft plans to offer Xbox 360 Core System, which comes with a wired controller and does not include a hard disk drive, for 29,800 yen ($256) on Nov. 2, a little more than a week before Sony's launch of its PlayStation 3 (PS3) console.
Microsoft currently offers a version with a 20-gigabyte (GB) hard disk drive and a wireless controller in Japan for 39,795 yen ($342).
The new version of Xbox 360 will be less than half the price of a model of PS3 that is equipped with a 20-GB hard drive and comes with a Blu-ray next-generation high-definition optical disc player. Sony plans to to put a price tag of 62,790 yen on it.
Nintendo, which will start selling its Wii console in the final quarter of 2006, plans to offer the machine for 25,000 yen or less in Japan.
Japan has been a weak spot for Microsoft's Xbox business, and shoring up demand in the stronghold of Sony and Nintendo is important for the world's largest software maker as it goes into the critical year-end shopping season.
As of Sept. 3, Microsoft had sold about 159,000 units of the Xbox 360 in Japan since its December launch, according to industry watcher Enterbrain.
Sony, in comparison, sold almost a million units of PlayStation 2 in the first three days of its launch in Japan in 2000.
Sony said on Wednesday it would postpone the PS3 launch in Europe, Russia and several other regions to March from November, citing a delay in commercial production of a blue laser component, a key part of the Blu-ray optical disc drive.
Shares in Sony were up 0.2 percent at 4,980 yen in afternoon trade and Nintendo was up 0.6 percent at 23,430 yen, compared with the Nikkei average up 0.51 percent.
($1=116.74 Yen) REUTERS PKS GC1028