Following a Sept 1 Xbox 360 price cut in Japan, Microsoft just confirmed a Sept 5 price cut in the U.S. and Canada.

As of Friday, the basic Xbox 360 Arcade (formerly "Core") system will sell for $199 (USD and Cdn), an $80 price cut making it the cheapest of the new-generation consoles.

The premium models, the Xbox 360 Pro and the Xbox 360 Elite will both receive $50 price cuts down to $299 and $399 respectively.

The strategy is designed keep to Microsoft in second place, behind the top-selling Nintendo Wii but ahead of rival Sony's PlayStation3, which has been enjoying a sales surge as of late due to a similar price reduction on a streamlined PS3.

"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 Business Week.

"We will sell more consoles this generation than Sony" he added.