Hardly, they're already losing like 70 bucks on each arcade sku sold.

The Arcade model will not be reduced in price next year. But the other two SKUs will be reduced in price by $50 each. Adding a HDD costs MS hardly any money at all.

My 2009 price predictions:

Arcade = $199.    Pro = $249   Elite = $349

Why? The Xbox 360 isn't considered to be as good value by many people as the Wii so the Xbox 360 has to be cheaper in effect to sway many of those potential customers.

At Topic:

Microsoft knows Sony is going to cut the price next year, so if they act first they can take the wind out of any momentum Sony may get with their own price cut. Essentially another price cut early in 2009 and they'll walk away with the U.S market between the HD consoles and severely weaken Sonys current and future financial position in the market.

Every console they sell, especially the Premium and Elite SKUs is probably worth $20 a year on average from Live revenues. So if we consider the fact its taken 4 years for the people to finally adopt the console it should take another 4 years for them to move onto another console so theres $80 of eventual revenue to go alongside any accessory and Live purchases as well. Furthermore each console will probably sell on average 10 games in those four years and thats another $60 of expected revenue @ $6 royalty per game. Furthermore once they get these people involved in the Live community the chances are they will upgrade to a Microsoft console next generation, so for many reasons aggression is very much warranted at this point to secure future profit and perhaps a strong position for the next generation.

MS will sooner or later cut price, but for low end model still has the price cut card available to play only two times (maybe three, making smaller than $50 cuts, but they would be less effective), so it will play it as wisely as possible.

Edit: having both now resisted with higher prices, one paying the price, the other not suffering at all, Sony and Nintendo could try to lure MS into wasting a price cut.

I wouldn't be surprised, but it's already the cheapest console.

I don't see how sales could pick up considerably more since it's already cheaper than the Wii, and much cheaper than the triple, but we'll see.

They have a lot of different price points they can reach. Theres also the option of increasing the HDD space/adding wireless to add value to the premium SKU instead of directly cutting the price.

Arcade: $200 -> $180 -> $150 -> $125 -> $100

Premium $300 -> $250 -> Add Wireless -> $225/$200

Tob honest 130 GBP is unbelievably cheap for a console. I think the pro ane elite will get cuts around September. I would definitly pick up an arcade for 99 GBP though. Please Microsoft.

I bought my 360 pro for 199€ with 2 games (Lego Indiana Jones, Panda) That was a X-Mas special from Microsoft
Only in Europe or in America too?

The current consoles should last till 3-4 yrs into the next console's life cycle.

But lots of games are developed for PS3, 360 and PC, so if PC is considered it'll be impossible for the Wii to own more than 50% of the market. On the other way, developers could be atracted to developing lower quality games with lower budgets to make profits.