I hope MS doesn't somehow think games are all the X1 needs. While the situation is not beyond saving, a near 2-1 deficit to PS4 early on will take a lot to climb out of.

If they have some weird, deluded executive idea that "hey it's all about the games, we'll show lots of cool games and the people will buy at  $499", well, it will be a disaster. If it was all about the games, Xbox would have dominated E3 2013! No, it was about DRM and PS4 undercutting them by $100, not the games. To this day at the risk of getting flamed, I'd suggest PS4 does not sell on it's current game library, it sells on future promise of it's hardware, and a tidy price.

What worries me most is I'm not sure how profitable X1 hardware is. It should be cheaper than the PS4 base model vs base model due to using DDR3, but I think, am not sure, a few hints from Microsoft's financials suggest X1 hardware is less profitable (break even or less) than I expect. Since the base hardware should not be expensive, this leads me to wonder if Kinect 2 is even more costly than expected. Or perhaps that the console is overengineered to be absolutely sure of preventing another RROD, also leading to more expense (bigger heatsinks, etc).

It could be a situation where, without ditching Kinect, no major price cut is currently possible (without losing a lot of money, which while MS can afford, they seem unwilling)! Which is scary. So then you either have to assume MS would be willing to give up Kinect. Which I have a hard time believing, because they put so much effort and expense into it.

The other interesting option would be achieving a price cut by making a version without any optical drive, which I give credence too because it has been rumored by the credible GAF leaker. However removing the disc drive only allows a $50 cut imo, and further, might not entice many buyers, because the value would not be there, most people might prefer to spend $50 more on the version with disc.

All that is just discussion, the bottom line is MS has to cut! At the VERY VERY VERY least, an official, worldwide, advertised, permanent cut to $449, with at least one free Triple A game packed in, is a necessity. I would suggest, even that is likely not enough. A cut to $399-however it may happen, with or without Kinect- is likely truly needed to get back in the game. Will MS do it at E3? If they dont, it will be a true facepalm.

They NEED a 100 dollar price cut to actually compete.

$349 and you'll see better sales in the US but the PS4 will win everywhere else.

$349 with no Kinect and a game... now that would take balls.

Yup. Which is why sadly, I dont expect it...

Microsoft has been way to conservative for about 10 years now. They have so much money but are unwilling to use it to gain any advantage in market share with lower priced hardware. The best example was how they priced the 360 the same as the PS3 for 5+ years, even while unlike PS3 they were racking in $60 per year on Gold fees for millions of users.

I'd probably be pretty thrilled with 399 at this point. Half of me wouldn't be surprised if they did nothing (I think they absolutely HAVE to price cut by September, but they might not do it at E3 they may wait until September)

they have the balls to not have a price cut!

sticking to the release price is ballsier than retracting because it is "cold"

They wouldn't because they invested too much into Kinect and they're already losing money on it.

Losing money on it?

Then why is PS3 beating 360 with a year less in the market and higher price? It's all about the games. And no, I don't see MS cutting the price so early, at least not permanently

The Xbox One was $450 everywhere for an entire month and included two games, Forza 5 and Titanfall. The pricing was fine and it still didn't sell better than the PS4.