By Chris Nicholls

SYDNEY: Microsoft has undercut the Nintendo Wii for the first time today, slashing its base model Xbox 360 games console price to $349 dollars.

Microsoft’s decision makes the Arcade version of the Xbox 360 Australia’s cheapest household console, $50 under Nintendo’s $399 price for its sales leader.

The rest of the Xbox 360 range also received price cuts, with the both the Xbox 360 Pro and top-of-the-line Xbox 360 Elite prices down $80 to $499 and $649 respectively.

The Pro model adds a 20 GB hard drive, wireless controller, headset and Ethernet cable to justify its price increase, while the Elite comes with a 120 GB hard disc, wireless controller, HDMI cable and 30-day trial Xbox Live gold membership on top of the Pro’s features list.

While no reason for the price drop was given, rumours have been circulating about a possible update to the line up at the E3 games show later this month.

The console is also struggling against its rivals, the Nintendo Wii and Playstation 3, with sales of both consoles far outstripping those of the Xbox 360.