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They are turning profit in the gaming department (think Halo 3, XBL) but I doubt their console is profitable. They can't drop each console $100, which is the only price drop I would deem significant.

They will drop the Premium to 250-299, eliminate the core, and drop the elite to 350-399. I highly doubt that it costs them less than $300 to make each Xbox360.

They won't drop too far below the Wii, which won't have a price drop for a long time. That will make it seem like the Wii is worth more than the 360. They may add games or controllers, but they won't drop the price of the core.