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According to Wikipedia, the original Xbox was dropped quite heavily in price only 6 months out:
# US$299 (November 15, 2001, Launch Price)
# US$199 (May 15, 2002)
My personal thinking on the matter is that they are now just becoming profitable on the hardware, which is something that is new to the MS gaming division. I think they'd like it to stay that way.
Keep in mind that THEY themselves may not have decided exactly yet. Two of the big factors will be:
1) What Wii/PS3 marketshare looks like going into mid-2007
2) This rumored new model 360 that comes with extra fanciness, like a bigger harddrive, HDMI out, and a smaller, quieter CPU.
They could conceivably launch the 360 SP at 399.99, but that is a big slap in the face to the people that have supported them thus far, though it would be good in that the street price, if not the retail price of the current core and premium systems will drop slightly.
If PS3 continues to not be perceived as a threat, then that works against the price drop. Wii is in somewhat of a different market. It already lacks the power of the 360, a price drop has less of an effect IMO.
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