The ads were real, said Aaron Greenberg, a group product manager for Xbox 360, in an interview Monday.

As the most popular console with a 20-gigabyte hard drive, Xbox 360 will cost 349 dollars. Its high-end Xbox 360 Elite, a black version with a 120-gigabyte hard drive and high-definition video support, will cost 449 dollars, aslo 50 dollars less. A basic console without a hard drive or wireless controllers will retail for 279 dollars, 20 dollars less, said Microsoft.

Sony slashed the price of its 60-gigabyte PlayStation 3 to 499 dollars, from 599 dollars, in July. The Nintendo Wii, the least expensive of the so-called next-generation consoles, costs 250 dollars. But Greenberg said the decision was not under the influence of its rivals.

"In fact, we had this in our plans from the very beginning¡K and the timing was linked to the release of several highly anticipated video games, including Madden NFL 08," Greenberg said.

"The first phase was capturing the core audience, which we've done successfully. Now as we enter our third holiday, we're aiming to expand audience," said David Hufford, director of Xbox product management.

The price cut will bring in a whole new group of customers who ruled it out at the higher price, and that Microsoft should enjoy increased sales immediately, some analysts predicted.

Microsoft also said Tuesday that the green and gold Halo 3-themed console, will go on sale in September for 400 dollars.

(Agencies)