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I doubt 360 will drop in price, especially mentioning MS's focus with the 360 right now is to turn a profit.

But your seeing the effects of PS3 and 360 lashing it out last year dropping price and new SKU's trying to get an advantage in the market to have it all in vein to the Wii and each other. Now with not much positive outcome to it they are seeing the side effects to it in 2008 with inabilities to drop price again. It helped Sony more than it did MS but it still put them both in a bad position to compete with the Wii. Not that it can't be done, but it seems that a lot of their moves in 2007 were rash.