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My theory as to why they didn't cut the price at all: They've got their big update coming that will include Bing search, Cable television, possible Skype (sooner or later), and their new Dashboard. With those features, Kinect is going to seem like a bit of a necessity. If people feel like they need Kinect, it's going to sell and they're going to make money--lots of money. The software sales have been decent but nothing special. They probably can't go the "Sell the device cheap, make money on the games" route. They want to make as much as they can on the hardware.