In a further effort to close the gap between the Xbox 360 and the Wii, while pushing the PlayStation 3 further into elitist expense, Microsoft has slashed the price of the US system making the Arcade bundle cheaper than Nintendo’s console.

From Spetember 5th, the Xbox 360 budget bundle will retail for US$199.99 compared to the Wii at US$249.99, while the hard drive bundle has been reduced to US$249.99. The Elite  version can be picked up for the same price as an 80GB PlayStation 3, at US$399.99.

A significant move after Sony seems to have taken its eye off the home console market to concentrate on a big handheld push.

"I’m not at a point where I can say we’re going to beat Nintendo," Don Mattrick, senior vice-president of Microsoft’s Interactive Entertainment Business told BusinessWeek, though he casually (and, in all likelihood, accurately) added; ""We will sell more consoles this generation than Sony."

The gap between Sony and Microsoft sales have been close recently - with the Xbox 360 pulling ahead by a couple of million units. This latest price cut is likely to further that gap on the run up to the big Christams push, though Nintendo can still sit back with more Wii sales than the Xbox 360 and PS3 combined.