May 21, 2001 2:55 PM PDT

Nintendo to sell GameCube for $199

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May 16, 2001
Nintendo will undercut its competitors by $100, selling its upcoming GameCube video game console for $199, the company confirmed Monday.

Nintendo announced last week that the console will go on sale in the United States Nov. 5, three days before Microsoft brings out its Xbox. The Xbox will sell for $299, the same price as Sony's PlayStation 2.

Nintendo had been widely expected to come in below its two rivals on price, partly because the GameCube hardware is less complex and lacks features such as a hard drive or Ethernet ports. GameCube games will sell for $50 each, a Nintendo representative said, comparable to PlayStation 2 titles.

Along with the price advantage, Nintendo is counting on an array of games featuring exclusive Nintendo characters such as Pokemon and the Mario Brothers to maintain its market position with younger players and families. The GameCube will also connect with Nintendo's upcoming Game Boy Advance to transfer game content, marking the first time Nintendo has tried to leverage its dominance of handheld gaming.

"It's a big competitive advantage for them," Gartner analyst P.J. McNealy said of the GameCube price. "It's really going to help with the 8- to 15-year-old market, which has always been their strength. When kids start asking for a game machine, the price is going to help make that decision a lot easier for the parents."

Pricing is a critical decision for console makers because of the industry practice of depending on royalties and other revenue from software sales to subsidize hardware manufacturing costs. Microsoft will lose an estimated $125 on every Xbox it makes.

IDC analyst Schelley Olhava said Nintendo can afford to undercut Microsoft somewhat. "I don't think the unit is as expensive to manufacture as the Xbox," she said. "But nobody's been able to do a bill of goods on the GameCube to calculate what their expense is going to be. We can't really tell yet how much they'll be subsidizing the hardware."

 

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