 The console was launched in 2005 |
From 14th March, the 20 gigabyte hard drive model will cost 270 euros, a drop in price of 80 euros.
In the UK, the entry level machine, which does not come with any hard drive, will cost 159.99, 40 less than the current price.
The price drops mean that the versions of the console are now cheaper than both of its competitors - the Nintendo Wii and Sony's PlayStation 3 (PS3).
Sony's 40GB console currently retails for 299.99 compared to 259.99 for Microsoft's top level machine - the Xbox 360 Elite, which has a 120GB drive.
The Nintendo Wii currently retails for 180 in the UK.
Microsoft said that the price of the entry level machine had been chosen because historically it was "the price point where a console's audience begins to expand".
The Xbox 360 has been losing ground to both of its competitors recently, despite having launched earlier. Mardell's Europe Day in pictures Moon marvel
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