Microsoft has confirmed to SPOnG that there will not be a similar cut in the UK. A Microsoft representative told us, "Pricing is handled on a region-by-region basis. We do not have a price drop in this region to announce."

This follows announcements in Japan and, more recently, in the USA that Microsoft's box will be slashed... in price.

In North America, Microsoft has just significantly escalated the console war, cutting the price of the Xbox 360 Arcade to below that of Nintendo's Wii.

The Xbox 360 Arcade will now retail at $199 (€137, or £112), $50 (€34, or £28) less than the Wii, which carries an RRP of $250 (€172, or £140). In the UK, the Arcade is already cheaper than the Wii by £20 at £159.99.

Similarly, the prices of the premium console and the Elite have been dropped by $50 (€34, or £28) putting them at $299 (€206, or £168) and $399 (€275, or £224) respectively.

That means that the Elite, with its 120GB hard drive, costs the same as the cheapest, 80GB PS3.

The price cuts will take effect tomorrow.

Microsoft is keen to tell us, "History shows that more than 75 percent of all console sales happen after the price falls below the $200 mark."

Microsoft has clearly had a sub-$200 360 on its mind for some time. All the way back in June last year David Hufford, a director of Xbox product management, said, “We are well aware that the sweet spot of the market is really 199 bucks.''

As you may remember the middle, premium 360 console recently had the amount of hard disk space it carries bumped up to 60GB. Similarly, Japan recently saw across the board price cuts on the 360.

Microsoft has been in need of a boost. Over the last few months the 360 has been outsold by the PS3 in America, while both systems are trailing behind the Wii.