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I think MS may already damaging the XBOX 360's perceived value although this would be damaging the 360 is a normal competetive enviroment but in our current economic situation it seems it is a winning stratergy.

The only problem I imagine MS having with the heavy price reductions is disatisfaction amongst those who already own 360's ( no one likes the value of what they own constantly depreciating ) and the XBOX brand name ( which will carry future XBOX iterations).

I'd say the odds are favourable but no by too mcuh.