As the games industry gears up for the predictable pre-Chrimbo marketing battles, Sony and Microsoft are ready to go head-to-head in a pricing war. Sony will be expecting a warm reception to the new PS2 price tag of £104.99 – due to be officially announced later this afternoon, whilst Microsoft has predictably attempted to take the wind out of Sony’s sales (ha!) by jumping in and announcing a price of £99.99 for Xbox.

Sony Europe had previously suggested that price-cuts weren’t necessarily the best way to prolong the life of the PS2, but to remain competitive, clearly such action was necessary. Microsoft, on the other hand, has more tangible reasons to bring the price down below the monkey mark. For many, an Xbox purchase would be as a second console – and bringing the hardware down to a two figure sum might now make that a more viable option in time for Xmas.

Eduardo Rosini, Regional Vice President of Xbox, announced the sub-£100 tag at lunchtime today, at the Leipzig Games Conference, “With this new pricing, even more European gamers, casual and otherwise, will be able to enjoy Xbox this Christmas.”

Of course, the success of these price drops will, to a certain extent, depend on what bundled packages are made available. A PS2 Eyetoy Play/Chat bundle would hold much appeal at around the £140 level, possibly attracting people not so well-acquainted with gaming; and a Xbox bundled with a top title like Ninja Gaiden, or even Halo 2, would surely sell well for around £120. Naturally, such packages would depend on the strategy of retailers etc., and nothing has been specifically confirmed at this stage.

The new Xbox price will become a reality on August 27, and PS2's will fall to £104.99 as of tomorrow. With both machines set to be cheap as chips (made from incredibly expensive potatoes) it should be a merry Christmas indeed for those looking to expand or establish their console collections.