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Microsoft cuts Xbox price by $30

The game console will drop to $149.99 in the United States on Tuesday, but one analyst says that's still $20 too expensive.

Microsoft's Xbox game console will be $30 cheaper starting Tuesday.

The price of the video game system is dropping to $149.99 in the United States and $199.99 in Canada, the software maker announced Monday. The price cut had been expected.

But the new price may not be low enough. On Friday, Piper Jaffray analyst Tony Gikas wrote in a research note that the console would be better priced at $129 to give a needed boost to sales of both hardware and software over the next year. The $149 price is a "risky undertaking" that will limit unit sales, he wrote.

Sony is likely to respond in mid-April with an identical price cut for its PlayStation 2 console, Gikas wrote. The two rivals are trying to keep interest strong in their devices as they prepare follow-on machines.

Microsoft contends that the Xbox is poised to be the only video game system to experience console unit growth in 2004 in the United States.

"At this lower mass market price point, we're opening up this great system to an even broader audience of people who can experience Xbox for the first time," Mitch Koch, corporate vice president of worldwide retail sales for Microsoft, said in a statement

The software maker also dropped prices of certain software products. "Xbox Music Mixer," which brings karaoke features to the Xbox, will sell for $19.99 as of Tuesday, Microsoft said. Games such as "Grabbed by the Ghoulies" will also drop to $19.99, while "Project Gotham Racing 2" and "Counter Strike" will see their prices drop to $29.99.