Microsoft is reported to have been dropping hints it will price the Xbox 360 and the console's upcoming HD DVD drive to ensure the two packages together come in at less than Sony will charge for the PlayStation 3.

According to GamesIndustry.biz, UK retail moles claim Microsoft has suggested it wants its offering to be the cheaper of the two next-generation media players next Christmas. The report follows suggestions Sony may only ship the high-end PS3 package in the UK.

Sony hasn't detailed UK PS3 pricing, but the 60GB model with all the trimmings has a European price of €599 (£408). The pared-down, gamer-oriented version, with a 20GB HDD, will be priced at €499 (£340) on the Continent.

That Sony might ship only the 60GB model over here was suggested earlier this week when some online retailers began taking pre-orders for the machine but not its 20GB sibling. Sony, of course, is staying silent on the matter, and given the need the company has to get as many PS3s out there, punting a lower cost version makes some sense, particularly if the fully featured model proves particularly expensive.

Since both units will offer Blu-ray Disc playback - though not via an HDMI port in the 20GB model's case - they are both arguably more attractive HD playback devices than an Xbox 360 plus external drive, merits of the two rival optical disc formats aside. While the winner of the Blu-ray vs HD DVD battle remains unclear, Microsoft has little else to offer by way of compensation for a kludgey two-box solution other than a lower price. ®