They may sell it at $399 but it'll certainly be sold at a loss if they do. I think $499 is more likely.
Let's not forget they launched the original XBO at $500, sure it came with Kinect but that price for a 1.31 Tflop machine? An overly large machine with an external power brick?
There's a lot more that goes into the pricing of a console than it's "flops" so it could be $399 but I think it's more likely to be higher.