In my opinion Microsoft made the same mistake that Sony is on the same path of making, and a price reduction alone will not fix the problem ...
There are only so many people who are willing to spend more than $300 on a console; by being on the market for so long above this price they saturated this market and will see declining sales in the future, while (at the same time) the larger group of people who are willing to spend more than $200 have heavily adopted to the Wii (and have little remaining interest in the XBox 360).
Microsoft needs a "Relaunch" where they can release new (high quality) software, along with a price reduced hardware, in a SKU that has added value; essentially, when they're heading into a period with a couple big releases they should announce a $50 to $100 price reduction and include a game or two (and an additional controller) with the system to encourage sales. A $300 XBox 360 preimium with Gears of War and Forza 2, heading into the release of a couple of big exclusive games is much more attractive than a $250 XBox 360 on Arbitrary Wednesday.
