According to Ars Technica's
mole, Microsoft will be slashing the prices of all Xbox 360 hardware this December. The
crippling the entire platform Arcade unit will be $199, the Pro Unit will cost $299, and the Elite version will be $399. While this certainly is a huge rumor it does make sense for Microsoft to cut the price ahead of the shopping season. We could see an announcement at the end of August at Leipzig but we'll see how it shakes out.
$199 is a nice price point for Microsoft as it puts them well below the price of a Wii. The prices would also probably force Sony to respond but we'll see how it shakes out this fall.