iSuppli teardown of the 20gb 360 in Nov 2006 was $323. Costs for the 360 are reducing at something in the region of 10% a quarter and the 65 micro processor should save $50 over the old processor.

$1 billon charge to fix 10 million Xbox "red ring of death" equates to about $100 per console.

So, if the 65 micron processor cures the overheating warranty problem, then Microsoft should save be able to make a small profit on the Falcon Premium if priced at $200.

So a pre-Xmas price cut would be in order to tempt some of those 10 million original Xbox owners who have not upgraded to get Halo.

Sony won't cut again until they can discern momentum from software sales. They aren't gaining marketshare on price alone but interestingly enough I think they are most screwed in Japan where they have neither software nor price going for them.

The PSP had a price drop of like 30 dollars and that boosted sales... I don't understand why you guys think this won't do anything... the stores will advertise the new prices and people will buy the damn thing.

 Ohh I think it will sell more, but I think that it wont sell enough more to keep themselves infront of Wii. I also think that the tard package is even more shit now.

I still expect another cut from MS before the holiday.

PSP cost 200 - now 169
360 Elite was 480 - now 450

  for them to be the same thing, 360 would have had to drop around $75

agreed 

like a rocket launch... you fire up the boosters first and then you push full trust..... 

If this is the price drop they are offering for Christmas, I think it would attract more buyers to the ps3 that were holding out waiting for a substantial drop.

 I know that the cost to manufacture the 360 is less than what it's sold for. But that doesn't mean they're in good position to lower the price of the system further. You're looking at one aspect of the business and completely overlooking the costs of the other operations. Clearly, the cost of the other operations far exceeds the profits generated by selling the 360. MS could be making $300 per system, but if their XBOX division as a whole is losing billions, it becomes hard to justify lowering the revenue stream by reducing the price of the system. On the other hand, if they were losing $300 per system, but generating billions in profits, it becomes far easier to justify lowering the price of the system even further. 

Now I'm not saying MS won't lower the price again, but I am saying it's gonna be more difficult to justify such a price drop after losing $2 billion last year and well over $5 billion over the last 7 years.