The reason for that gap in logic is the assumption that the console market is a zero sum business.

While there is unquestionable overlap, particularly with the PS3/360, the ultimate goal of any platform is to produce enough success to stay in the game for the next generation. Being first simply guarantees pole position in the next round.

When sold at an initial loss, the assumption is that early lost revues will be recovered through license fees from software in the future, which becomes more feasible the more titles being produced (profitable or not; doesn't matter to the platform manufacturer, so long as they receive their license fee).

So long as license fees continue to keep MS profitable, the Xbox is still in good standing. There is no danger of "losing" all its major licenses to the Wii, so long as the PS3 and PC guarantee a market for hardware intensive softs that are diluted at best on the Wii.

I don't believe the motion control stuff. We would have seen it announced at E3 or GC, if they were doing that. They would want everyone to know.

I do think it's a possibility that developers are pressuring MS to be able to use the HDD for games, since the DVD size limit is becoming a factor. I can definitely see FF 13 needing to use the hard drive for the basic game, while running the cinematics off the disc. Yes, I know you can change discs like in PS1 FFs, but game data takes up alot more than it used to and changing discs to go to a different part of the map can be very inconvenient. MS should have had all systems have an HDD from the start.

I'm assuming (which is dangerous business) that MS will not reduce the (MSRP)price of the 360 below their cost, now that they have been selling them at a profit...

I've never said MS game division used logic or reason though.

If I were them I wouldn't drop the price, they are selling 100k+ a week at a profit, why the hell would you drop the price.

The late comers and value buyers are generally not the people who buy 5-10 new $50-60 games per year.

The reason why Nintendo still makes consoles and no other major console manufacturer from the eighties or early nineties does is because they run their business like a business.  You know: maximize profit, cut costs, etc.

Atari, Sega, Panasonic, NEC, Hudson, Magnavox....

You want me to keep going?

This gen Sony and MS learned that the video game industry isn't a zero sum business, and has never been a zero sum business... they are big companies though, and should be able to survive these losses.

I hope not. I pray that there will always be an option for a gamepad.

I like to think of myself as semi-savvy; not 100% clued up on the ins and outs of the 360 but know a reasonable amount about it.
I also feel there are plenty of other consumers out there who feel the same.

Now, when i see a price drop in a SKU that was accounting for little more than 10% of the total units moved, it raises alarm bells.

First bell is, is this old stock, not the Jasper? Do/will they even make new Arcades?
If not then the $199 might only serve to bring the RRoD problem to the fore again.

Second bell is how much of a sucker do they take me for? by dropping the price of an inferior bundle by the amount of a new game, do they expect me to buy a new game?
Then charge me for an internet service that I'll need to get an additional (proprietry) HDD to get to use efficiently?

I smell something bad, and it's hitting shelves in September.

I haven't kept an exact list but I do believe your posting means at least one poster has supported, at least in part, each of the possibilities that have appeared in the press. And I would not be at all surprised if you are right.

Here are my two cents on the situation. I feel that Microsoft is lowering their price not to compete with the Wii persay, but to adopt the Wii owners. I don't have a link but I recall reading that Microsoft feels that the Wii owners will soon be ready to upgrade.

With a lull of good Wii games coming out in the near future this may be the time for them to upgrade. Microsoft knows what the Wii owners like. Their E3 showed off some casual games and avatars...a few months later we hear of a price drop.

If Microsoft is right and the Wii owners are ready to adopt to an HD console, then $199 is a good price. Casual gamers don't have much of a need for a hard drive (if they did then Nintendo would be a little more hasty to release one). The 360 comes with a 256 MB memory card which is the same as the Wii's internal memory.

Think of it from that perspective...it makes so much sense. There's Millions of Wii owners out there who are simply just Wii owners. Microsoft may be right about Wii owners wanting to upgrade, we are embracing the HD era more and more each day.

Honestly I'm a Wii only owner, and a 360 at $199 is hard to pass up, unfortunately I'm one of those owners who wants a hard drive and thinks the PS3 will be better in the long run. Guess we shall see...

From the perspective of the Wii, the XBOX 360 does not stand a chance of making an effective stand. The barriers to imitation of the Wii's full strategy are simply too high for MS to actually tackle with the 360 as their competitive source, meaning that the best we will see for the $200 360 is a system with interface components of the Wii's success, but none of the values. As Nintendo has learned the hard way repeatedly in the last decade, components of success do not guarantee success.

Ultimately, it won't make a significant difference either way if the $200 360 model has a motion controller or not. If it does not, it will just be a cost-superior alternative to the PS3 (which the 360 already is anyway, meaning no lasting impact will be had). If it does feature the "Vapor Wand", it will be a value-wise inferior alternative to the Wii.

2gb-4gb of flash would probably be too expensive for the system, I think we'll have to wait for the slim version coming next year before we see an increase in flash storage space on the Arcade. Flash is getting cheaper but its probably not cheap enough and they have the problem of dealing with the old stock when the release an updated SKU with different features.

its a smart move and the timing couldnt be be more suitable with christmas rite around the corner and ps3 picking up in sales , and the wii doing what its been doing , its microsofts last bullet and if it doesnt make any diffrence in sale till late next year , that bullets is coming straight back to the heart.