Sony today announced that the price of PlayStation 2 will be dropped to £169.99 in the UK as of Saturday. Microsoft immediately followed with an announcement that, from Friday, its Xbox will retail at £159.99, according to a report by games publication MCV.

The price drops will be reflected throughout the European market.

According to Reuters, figures from a survey conducted by Gigex on-line between 15th July and 15th August 15th, revealed that 39% of 12,288 respondents plan to purchase an Xbox this summer, 27% will buy a PlayStation 2 and 17% plan to purchase GameCube.

In June, the US price of the Playstation 2 price and Xbox dropped to $199.99. According to Forbes magazine, financial analysts have speculated that Microsoft loses as much as $150 on each Xbox sold.

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