Judging from the PS4's specs, and assuming that Microsoft's hardware will be similar to it (considering how similar they were in the recent generation), I can see $500 as a realistic price point for Microsoft's next console. In addition, I can also see one of the PS4 models within that price range. If the $300 subsidization option is real, it may help tremendously, because I imagine many people will gladly accept the lower price, and not really think about how much more of an investment it will be over paying the bigger intial price for the $500 version.
If these rumors are true, I do think that Sony is going to have to also explore subsidization options (perhaps with their Gakai/PSN Plus features), although I hope that Sony keeps basic online play free.
On a sort of related note, I wouldn't be surprised if PS4/Nextbox games go up in price to $69.99 (US), due to the rising costs of development.
