Looking back at the 360's performance possibly Microsoft could have anticipated many of the problems they had.

MS are trying to make a profitable XBOX so covering the costs of RROD and aggressive price cutting at the same time would have looked really bad on their financial reprorts.

@Kowechi , but with aggressive price cutting earlier on the consumer would likely have declared the XBOX the HD console of choice.

It sounds like the 360 is the HD console of choice in the U.S and the PS3 is the choice in Europe.

@Kowenicki Microsoft have the finances to make risky moves , more so than Sony and Nintendo and considering the performance of the XBOX i'm pretty sure Microsoft would have wanted a console that would be outselling all it's competitors as opposed to fighting to stay out of last place.

Waiting to see how the consumer/competitor will react is a safer option but aggression earlier on in the generation with a low price point where the consumer is still making up their minds or have no clue about what is the most viable current gen console is would have been a real advantage to the 360.

They really couldn't for two reasons mainly:

First RROD made them devote their engineering team to fix the issue, delaying the transition to 65nm.
Second, because of repair costs every 360 had their cost increased.

Nowadays that the RROD is mostly fixed and they are back on track with the process transitions we should see plenty pricedropping.