MS doesn't need a pricedrop in Japan. They break even on h/w sales there. If anything, the precieved decrease of revenue on a JP price drop, should instead goto funding more exclusives like Ace Combat 6 and Blue Dragon - we've already seen they move more hardware than anything else MS can do.
As for the rest of the world, yes, MS needs a price drop early next year in the US and Europe to coencide with GTAIV. A $50-$70 drop would corner the US market, and keep the US/Can in MS hands, and allow the X360 to fight for 2nd place in Europe.
Back from the dead, I'm afraid.







