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A price drop right now would be a bad idea for MS for a few reasons:

1) They need to see what happens with the PS3 price drop and react accordingly. You can debate how truly important this is.
2) It would seem like a knee-jerk reaction to Sony's price drop a few days earlier instead of offering a better value to customers. They'll also get more press with a later price drop further away from E3.
3) They want to place the price drop as close as possible to Halo and the release of the Falcon console. That way they'll build up even more press momentum (H3+360 Pro for around $360, nice) and they'll lose less money trying to move their current (and expensive) stock at regular price.


But they definitely need a price drop and they need it before the release of H3.



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