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NightstrikerX said:
Xbox 360 still has a lot of options to it, Although your idea of 1 free year of xbox live gold has some merit. Although 1 free year is too much, I can see them including a 14 day, or 1 month trial with every Xbox Pro and Elite to help boost sales of Xbox Live Gold.

I don't think Microsoft would accept defeat from a simple price-drop. Obviously Microsoft knows that sony has a price-cut lined up and will have they're own options to counter it.

I don't think anybody doubts this, the only question is if their countermeasure will work. Honestly, unless Microsoft can match Sony dollar for dollar with a price drop, I don't see the 360 likely being able to outsell the PS3 it it drops to $299. 2008 showed us quite clearly that the PS3 can significantly outsell the 360 when the difference was $120. Even with 360 at mass market price, I don't see what would keep PS3 from doing so again if the difference was only $100 or even $150 if Microsoft issues a $50 cut for the Arcade model.

The only way I could see 360 continue to outsell PS3 if it drops to $299.99 is if the 360 dropped to $124.99 or less, but at that point Microsoft would be screwed for the rest of the generation because they likely wouldn't be able to drop the price of the system ever again for the two to three years it still has left before Microsoft launches their next system.