Microsoft's Xbox 360

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NEW YORK (CNN/Money) - It could be a confusing holiday season for some holiday shoppers.

Microsoft Wednesday announced two pricing plans for its next generation video game console. When the Xbox 360 goes on sale this holiday season, buyers will be able to purchase a no-frills version for $299.99 or a bells-and-whistles version for $399.99.

The less-expensive core system will feature only the Xbox 360 console with a controller, which has to be plugged into the system to play games. The $400 option will come with a 20 GB hard drive, a wireless controller, a headset (used for talking with other players online) that stylistically matches the Xbox 360 and, for a limited time, a remote control allowing users to more easily access the machine's multimedia functions.

The pricing, announced today at the German Games Conference in Leipzig, Germany, takes Microsoft (Research) into relatively uncharted territory. Typically, initial console prices have not exceeded $299.99 (both the original Xbox and Sony's (Research) PlayStation 2 were sold at that price).

"If you look at the processing power that's available in the Xbox 360, you'll see it is more powerful than what you can get at the PC level today for a reasonable price," said Mitch Koch, vice president of retail sales for Microsoft's games division.

While both versions of the Xbox 360 will be available simultaneously, Microsoft plans to have more of the $400 version on shelves, which could confound some of Santa's helpers as Christmas draws near.

The company would not say how many of each version it would have available. Nor did it further clarify its worldwide launch date for the system beyond "Holiday 2005". (Most observers expect it to be released in November.)

Microsoft also announced the price points for over a dozen Xbox 360 accessories, including stand-alone wireless controllers ($50), detachable 20 GB hard drives ($100), headsets ($20) and Xbox 360 faceplates ($20), which allow users to customize their machine.

Those hoping to take advantage of the Xbox 360's oft-touted high definition graphics will either need to purchase the $400 bundle or buy separate component cables (which will sell for $40) along with the basic system. The lower-end package will ship with standard AV cables.

Gamers who buy the $400 version of the system will also find their hard drives pre-loaded with music, gaming videos and more, though Microsoft declined to specifically say what it planned to include on the hard drive.

The hard drive might seem like an expensive luxury to some shoppers, particularly those buying for someone else this holiday season, but for current Xbox gamers, it's a critical piece of equipment. Without a hard drive, the Xbox 360 will not be able to play any games from the current Xbox, including the phenomenally successful "Halo 2".

The prices unveiled Wednesday apply to both North American and European consumers (the numbers are the same in Europe, though they're in Euros, not dollars). Japanese pricing was not announced. Koch said those prices would be unveiled at the Tokyo Game Show in Japan this September.

Hardware's not all that's going to cost more as the next generation of video games begins. Most major publishers have quietly acknowledged that major games will cost $59.99, a $10 jump over current prices.

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Morris is Director of Content Development for CNN/Money. Click here to send him an email.