Posted this myself about half an hour ago on N4G. Very interesting:

"According to a Dutch blog, Microsoft is planning to cut the price of the Xbox 360 to €199. This would make the Xbox 360 €50 cheaper than the Nintendo Wii. Recent rumors were suggesting that Microsoft was planning to cut the price right before the launch of Grand Theft Auto IV, to win more potential buyers.

According to the blog keeper, he has gotten word from a very reliable source close to Microsoft that the Xbox 360 Arcade will see a price cut to €199. This price cut would go in affect as of February 14. Microsoft decided to cut the price after Sony was reporting the PS3 would surpass the Xbox 360 in total sales about late summer 2008 in Europe.

Any plans for a price cut for the Premium and Elite models are highly likely according to the blog. No mention was given about a American price cut, and it seems this price cut is purely intended for Europe."

http://www.n4g.com/xbox360/News-107488.aspx

Original Source: http://games.blogo.nl/?comments/200824-xbox-360-prijsverlaging-defini.html

If this is indeed correct, Microsoft will definitely compete better in Europe. If this price cut will go overseas to the US, sales will be huge for Xbox 360 IMO.

MS really has a chance of staying in 2nd place if they stay aggresive. They have the software and the support. They just need to make sure those consoles get sold.

I'm really hoping this is true!

Let me run some calculations here:

Typical VAT in Europe (not for every country, but for many): 21%
199/1.21 euros in usd = $244

There are probably a few more taxes which need to be subtracted (recycling fees for example), but that gives us an idea of how much Microsoft would get from the sale.

This would be great!

I don't get it... since when do companies make money off taxes?

THis happens

then expect 120GB in UK for £299

& PS3 40GB for £199

I think SONY will continue this price war....seeing as they were in profit

They don't, which is why I removed them from the price.

199 divided by 121% is 164 euros, which is about $244.

But who actually buys the arcade pack? This would not help much

oh, I knew I was missing something

@ DMJ - The casuals

Hmmm I originally l had hoped that the 360 would die a fast death like the Xbox. So I could get a console and some best off games in the clearance sale.
But since seems increasingly unlikely this price gets slowly in the area where I would just buy it to play Halo3 and Mass Effects. It wouldn't replace my black monolith simply for aesthetical reasons but I would really like to play Halo... If it was more reliable I would buy one on Ebay.