It is not clear what Microsoft might be doing to drop the price on this lower-cost version of the console. There are rumors of a download-only version of the console (that would not include a Blu-ray drive) that Microsoft has apparently been testing, but sources tell us that it is not likely they would release that version of the console through the retail channel; and it is being looked at for something that Broadband and Cable TV providers would offer.
That leads to speculation that Microsoft has already found a way to reduce the cost of the current console, and the most obvious way to do that would be drop Kinect from the current bundle and offer it as a “core” system. While Microsoft has said this is something they were not interested in doing, the lack of Kinect titles and a general lack of interest in Kinect might have caused Microsoft to rethink this strategy.
While some cost reductions are possible, sources are telling us not to expect the price of the current bundle to fall by much more than $50 at the most. As for the lower-cost console offering, we are told that it will still be a while, but it will arrive before the end of the year for sure.