I believe they are making a little money on the elite but lossing money on the arcade (this may have changed after the price drop I am not sure on the elite).  But always remember they are making a killing on live (all profit).

ah true. live has those millions of members + the monthly fee. good point

Why does MS sound so paranoid.. this Christmas does belong to PS3 though.... 360 has next year with natal...

M$ is probably going to wait till next spring at the earlies for another price cut. And i wouldnt be surprised if they only drop the elite to $249 and then have 250 GB limited edition models release for big games at $299. they will most likely leave the arcade price alone or drop it to $169 to better compete against the wii and the PSP-3000 and DS.

im not so sure, PS3 has the advantage at the moment for sure, but its a long way to Christmas, Natal also is an uknown, I'd be hesistant to speculate too much on what effect Natal and PS3 motion have on the console war (if any)

At this point anything can happen a 150 dollar xbox 360 arcade was always possible in my mind for this year, as well as a 250 elite which would very competitive against the ps3 at 299, I didn't think a 250 elite would be that competitive a few weeks ago when sony dropped the price of the ps3, but now it could be the ticket to microsoft winning yet again this holiday season especially with the arcade being half the price of the ps3, so michael pachter could be right, but once again he is not saying anything that we haven't thought of, but it's good to hear him come out and say that because people will still listen to this guy just because he is an internet celebrity.

Actually the last 5 weeks proves that a price reduction needs to be a price reduction on the dominant SKUs not the SKU that didnt sell well anyway.  All MS ended up doing was add 60GB to the $300 model.

True, the pro model was the dominant one and the SKU that most people bought. With the dominant SKU being the elite now the average consumer won't notice a difference since the price didn't change, but the product got an update instead. 

A good example would be the PS3 models that came before the Slim. No matter how much options or variations of hard drive capacity, there was no true price cut to the the console. It wasn't until the 40gb and finally the the slim that there was a real sale increase. 

ATM they are probably waiting to see the long term effects of all the price cutting. If the 360 starts to get into real trouble, they will price cut soon. If not, a Sepetember 2010 price cut is possible still

And I though Nintendo was bad but MS have reached a new level... cheap system but extremly overpriced control/Hdd/Wireless etc etc.