Microsoft Using Free Xbox to Spur PC Sales, But Will it Work?

Starting May 22, Microsoft (NASDAQ: MSFT) will begin giving away free Xbox 360 consoles (the $200 four-gig version) to students who spend $699 or more on a new Windows PC. According to Mashable, this deal – which will be available at Best Buy (NYSE: BBY), the Microsoft Store, Dell.com (NASDAQ: DELL), and HP.com (NYSE: HPQ) – was announced on the Windows Blog today.

This is an interesting deal, but it begs the question: which item does Microsoft think consumers value more – the Xbox or the PC? Typically, when corporations make an offer like this, they are using the “free” item to encourage consumers to buy something they might not want. Considering how well the Xbox 360 has been selling versus Windows PCs, it's not hard to figure out Microsoft's motives.

And let's not forget that Apple (NASDAQ: AAPL) offered a similar deal – buy a Mac, get a free iPod Touch – to students last year. Assuming that imitation really is the sincerest form of flattery, Steve Jobs must be glowing right now.