Dont think the apparent strategy is the right strategy.

Right now it looks like they will go with

Arcade at $199.99 (possible reduction of $20-$50)

Elite at $299.99.

With that I expect the HDD starter kit to upgrade to 120GB and be priced at $99.99.

This leaves a hole in the competition with the PS3.  Thier isnt a 360 available with HDD that is less expensive than the PS3.  Up until now MS has always had a 360 with HDD available for less than the PS3.

Thinking MS should either price the 360 with HDD at $249.99 and forget about a $300 model or change the models to the following:

Arcade $199.99 (better at $149.99)

Pro $249.99 with most cost effective drive available and thinking with the new PS3 slim having a 120GB then 120GB is the most cost effective drive.

Elite $299.99 with 320GB drive.  Still has higher profit over 120GB drive model. (Newegg has 120 for $50 and 320 for $65).

At a minimum if MS is going to go with only one SKU with a HDD they should up the HDD to 320GB.

I don't see a Arcade price cut happenning anytime soon, not after the price increase rumors in the UK. Arcade at $199.99 and Elite at $299.99 seems to be MS strategy until, say, E3 2010 or so.

i think they need to create alot of great game bundles 1st and see how they sell. if not up to their liking then drop the arcade to $179.99 and the elite to $279.99.

MS should drop the Elite to $299 and discontinue the Pro as rumored. The Elite is currently priced with the cheapest PS3 and should try to maintain that position. Unfortunately, an Arcade at $199 and an Elite at $299 doesn't leave any room for the Pro.

I think they dropped there price too early in an attempt to kill the PS3 sales and compete with the Wii. Now they cant afford to go any lower and probably wont for awhile.

All MS has to do is cut the Arcade in the U.S. to $179 - and the Elite down to $249. Bundle it with a couple games and they are set. MS isn't worried much - they aren't losing money like Sony is with this price count. Folks are excited and overjoyed that Sony is releasing a slim, cheaper version of the PS3, but folks need to come back to earth and realize Sony is so far in the red, and this move is gonna take a while for them to dig out of the hole they made for themselves.

The options are numerous.

The easiest by all accounts would be to outfit the Arcade with a 60GB HDD and suddenly, the $299 elite is quite redundant in it's price to functionality advantages.

Price drops as you've suggested are logical.

But I say, nothing needs doing. Break it down by region

Japan - Always a dead loss, nothing can be done, so don't bother.

USA/UK - Basically the English speaking ones, PS3's high UK price is still undercut by all other consoles and SKUS and frankly, I doubt the USA's love for Uncharted and Ratchet outweighs Halo and GTA any more then it did in 2007.

Everywhere else - Difficult to gauge, but then the PS3 is still priced higher in Euros then the other systems, give it to the PS3.

So PS3 probably gets a bit of leverage behind it until MS reacts, which could be tomorrow, or next year. I bet the latter.

Yeah they need to rule over the Americas. I think they should concentrate on Natal. I hope the hard drive gets a huge price drop.

I think this is their best course of action.

Is that, or risk losing their current lead on hardcore.