Let just think about this a bit. First MS has not even pulled a slim or even a real price cut. Only in Japan is the PS3 really kicking the 360 butt which everyone pretty much expected. The 360 has sold pretty strong in NA and continue to hold off the PS3 even with some of it's bigger guns hitting the holiday.

The 360 has some very nice exclusives that cover a wide range of genres.

Personally I believe Sony has shown their hand early and they had to. The brought out the slim and a 100 price cut. This killed the profitability that the slim was going to bring to Sony, so I highly doubt you will see another price cut from Sony this year and probably not even next year.

On the other hand, MS has not pulled their price cut. They also have the option of a slim redesign and upgrade of the 360 (sans blu-ray). Also there is the rumor of MS licensing out the 360 arch to other companies like Toshiba and cable IPTV companies like AT&T. A licensed company like Toshiba could bundle the 360 with a blu-ray player.

I can see if MS is feeling big pressure from Sony that they could do a Slim, cut the Arcade to 150 or even 99(wow), bring out Natal and have 3 hit combo with Halo Reach for the holidays.

I certainly do not see any major moves beside games from Sony this year. 3D games sounds awesome but if it means you have to buy another HDTV set, you can forget about any real update.

they will go by NPD numbers and ignore the existence of japan, like people do here probably.

@perpride, microsoft can 2 do thing, heavy price cut the 360 and hope for natal it's a success and by success it have to be wii fit like sucess.

sony will cut alot more that lead before natal comes out, but considering natal is hardware, i don't expect the price 360 go down that much when they actually issue a another price cut.

I can has the candy?

CANDY!

That?

Maybe. With some real killer apps, anything is possible. They just need another stroke of genius, something to do for Natal what Halo did for Xbox. Microsoft got its miracle, device-sustaining killer app before, and could nail it down again, though the odds are against them.

What will it cost Sony to get thee WW lead. I believe Sony already paid a heavy cost with the 100 price drop with the slim. Even if Sony get the WW lead, will they be able to sell more software than the 360. There is more at stake then just matching the 360 in hardware.

The 5.4m lead really doesn't mean a whole lot considering that's virtually what the 360 sold its first year. Granted there were inventory shortages, but MS had an entire year to sell their next gen system with the only competition being last gen hardware.

Without having seen any of the games, I just can't see Natal as the great white hope for the Xbox that's going to turn everything around, but by the same token; no one's seen any of the games, so it's too early to really have a legitimate opinion. Wait until E3.

It may well be that the first batch of Natal games are novelties and little more, with later efforts offering something genuinely new and unique.

As for the price cut/hardware repackaging; the main point of redesigning the casing would be as a cost saving measure, which would presumably mean a price drop for consumers if the chipset can be reduced, the CPU/GPU reduce further enough in size to shrink the cooling system and lower the power consumption.

The problem is that if MS wants to bundle Natal with all Xboxes (which they should if they're really banking on it as being a major part of the future of the system and potentially the next Xbox), the price drop could effectively end up being a "free" Natal package, meaning we'll still see a $299 Elite bundled with Natal and hopefully a good Natal game.

It would be similar to last year's $100 price drop, which was effectively replacing the 60GB SKU with the 120GB SKU for the same price. Not exactly the same as SCE knocking $100 off the price of a PS3.

Since I still think MS can sell the Natal unit separately to the current user base for around $50 (the price of a controller), I have a hard time seeing it being bundled for anything less than $250 unless they're banking so heavily on it moving consoles that they're willing to start taking losses on every bundle sold.

It seems doubtful we'll see an Arcade Natal bundle going for less than $199, but if MS can make it happen without taking a bath over it, great.

Yes, Natal is the last hope, but I don't believe there is much hope in Natal.

Microsoft hasn't been aggressive enough with price drops. The X360 should have been dropped to $249 or even less by now, the Arcade should be $149. So it's their own fault that they are letting Sony take the lead.

Apparently MS is satisfied with the revenue being generated by the Xbox/games division.

Maybe they do have drastic cost slashing measures on board for this year, or maybe they would just as soon not give away their hardware in the interest of "beating" SCE. Unless they literally drove SCE out of the console and gaming business (too late by now), there really wouldn't be any victory in being able to state, "We're Number Two!"