So let me get this strait,  a sony Rep just decided to give you some killer info that they refuse to give to anyone else.  Nice,  maybe you could also find out what tomarrows lotto numbers are and who wins this weeks football games so I can make a few wagers.  Thanks.

Not so much "if" but "when".

Since NXE we have had the ability to install games to the hard drive so that does give a little use to the bigger hard drive.  I don't see the need for a larger hard drive however, there are only so many games you need to install at the same time.

I would imagine instead of trying to cut the price by a lot M$ would actually make a small cut and then start bundling some good games with the console.  Like Halo3 or Gears.  This would give it a better draw than just a simple price cut, IMO.  Either way I wouldn't expect a knee jerk responce from M$.  They probably already have a plan ready for when the time comes.

Your suggested price of the Pro & Arcade model will probably not be possible until MS merges the CPU & GPU onto a single chip (possibly leading to a slim model to reduce shipping costs).  This probably won't happen until the end of 2009 but if MS is confident that the transition will occur smoothly and is willing to eat the short-term losses then MS might drop the price early to prevent the PS3 from gaining momentum.  The $60 price difference between the Arcade and Pro is also reasonable since this would be close to the difference in profit (or loss) margins of these 2 SKUs (although I expect MS would want to make a bit more profit on each Pro SKU).

Increasing the size of the Elite's HDD would probably cost < $10/unit and is potentially a good selliing poing against the PS3 (although people looking to buy this model will probably be comparing the PS3 vs the X360 and not the HDD sizes).  Currently the Elite is a horrible value unless you really need the extra HDD space immediately or you really value the colour of the console.  So I agree it needs the largest price drop and some extra value.

Personally I think that MS will only drop the price after Sony makes a move but they will probably wait until October 2009.  If Sony doesn't drop its price next year (which is extremely unlikely) then MS might wait until after the transition to an integrated CPU/GPU (so around Spring 2010).  Also they may not make cuts quite as deep (i.e. $179/$249$/$299).

Ah March that historically critical shopping period !

I see no reason why MS wouldn't make another price cut. Manufacturing is only going to get cheaper and with the success of this holiday season I think the price cut will come again in September 2009.

They are already the cheapest console now. What would a price drop accomplish? MS will not drop price again for another year. Probably a $50 drop for next Christmas.

The cheapest 360 will still be 1/2 the cost of a PS3 at that time. ($150 arcade vs $300 PS3)

If the PS3 drops to $299 in March (highly unlikely $349 sound more realistic) all Microsoft would have to do to counter is add a 20GB hard drive to arcade models and leave them at the $199 price point as for the Pro/Premium and Elite model MS may drop the price but not as drastic. I think MS is already leaning this way after saying newer Arcade models will have 256 MB internal storage. I predict by the end of 2009 Arcade models will have hard drives.

In my local store in the Netherlands, you can get PS3+LBP+Resistance 2+ extra xontroller for 350 euro.

So that's practically 300 euro if you take away one of the games.

You probably haven't seen any of Microsoft's recent quarterly earnings reports, but suffice it to say, if MS sold the 360 Elite at $100 a unit, they wouldn't go bankrupt. Infact, if they sold 50 million of them, at $100 a pop over the next year, they wouldn't go bankrupt.

I would say if the PS3 was dropped to $300 though, Microsoft would have to drop the Elite to 300 to counter.