I think XBL is too much of a cash cow. they've got about 10 million XBL goldmembers paying $50 a year give or take. That's half a billion a year right there. Plus they have ads on the dashboard and heck most XBL games don't even have dedicated severs so maintain, talk about eeassy money. 

No I think MS would take a hit on hardware loooong before they give up any of that free cash.

Please tell me this - and you claim to be a 360 *owner* - why does MS have to drop the price of the Arcade to $99? They aren't losing money on the 360 - they posted a profit while Sony is losing money on every console sold. And MS is desperate? They were last gen when they kept cutting prices to match the PS2.

This time? Sony is the one rushing the Slim, cutting prices to within striking distance of the 360. Of course it would sell - but the big question that is way too premature to answer is - will it keep selling at this pace.

Sony has been desperate this entire gen. They showed how desperate they were when the discontinued two skus in less than a year after launch, dropped the price to $499 - and then $399 and now $299. The Arcade/Core 360 was $299 at launch - the Premium was $399. In the 4 years it's been on the market, the Core dropped just $100. Think about it - the Core never had a hard drive - and neither has the Arcade. The Elite was $499 - and has dropped $200 - but no where as fast as the PS3.

1) I see Arcade 149$ and Elite at 249$ next Christmas, yes.
2) 99$ Arcade won`t be here untill atleast 2011.
3) Even though, PS3 is kicking x360 ass right now, x360 still has a huge lead and a Natal thing next year, instead of 99$ Arcade.

Also, other thing, even at 99$ Arcade, you still won`t be able to play Uncharted 2, Killzone 2 or LittleBigPlanet and other games. This mean, that after some point, price won`t matter that much.
And in late 2011, PS3 will probably cost 199$.

Well a $99 360 could signal the beginning of the last couple years of this gen.

We already know that fall of 2010 will see the launch of the natal 360 and this could be sign that a natal 360 could price at $199. Two years bringing Natal into the market and then the launch of the next gen machine in fall 2012.

^ I think, Natal is already next xbox.

GC + Wii mote = Wii
x360 + Natal = XBOX 3

Why spend more money on HW, when you can sell already Natal for current x360 users at 149$ or 199$.
Also bundle x360 with Natal at 299$.

Because, well, all what new console can show in terms of graphics, will be Crysis+ level graphics.
I mean, Gran Turismo 5 already showing almost photorealistic graphics.

I'm not talking about 2006 or 2007 or PS2, PS1 or SNES. I'm talking about 2009 and how any time the PS3 and 360 have had a comperable price point the PS3 has outsold the 360 in any and every region. Also I never said Microsoft was deseperate but if they dropped the arcade to the same price as as a PS2- cheaper then a DS or a PSP even- yes that would be an act of desperation. At what point does Microsoft consider this option?

If PS3 closes the gap, after the 360 had a year headstart, after they made all that effort to gather all those games that made a PS2 a success, after spending all that money on advertising ($40,000,000 marketing for Halo 3 alone), after being $100 or more cheaper for the majority of it's lifetime then yes absolutely yes that would be a humiliating defeat for MS. 

Oh, so if ps3 was initially selling well do you honestly think sony would have dropped the slim on us as soon as they did? in previous gens slims were introduced to keep sales momentum going, this gen it was to prevent sales from going desperately low.

Bottom line______________________________

but they never offered a gift card, right?

@Steroid...I don't see MS being desperate at all, they understand that their competition is outselling them but they also understand they are in a better financial position. For them the choice to increase market share by offering a lower price is a decision made by people smarter than us and far from desperate.

1) Just like Nintendo with DS Lite?

2) How do you know, that 299$ PS3 wouldn`t be outselling x360? Since, PS3 at 399$ was oustelling 349$ x360 in 2007.

Sony released Slim, because they could, after they improved techprocess. Why wait, when you can use both 299$ and redesign?