Evidence $199 Xbox 360 is on the way – Microsoft to discontinue model?

Several weeks ago I discussed the rumor of a price drop to the whole Xbox 360 lineup including the Arcade and Elite. Now that rumor seems closer to the truth then ever with retail adverts showing the speculated price drop. $199 Xbox 360s on the way? Details after the jump.

The rumor is as originally reported by Ars Technica the Xbox 360 Arcade will receive a $80 price drop to $199 and the Elite from $449 to $399. The Elite price drop I understand but the $80 price drop the Arcade is getting I definitely don’t understand. I speculated before, could this be a fire sale of some sorts to clear the Xbox 360 lineup?

Microsoft has already proved to us they are replacing the 20GB system with the new 60GB system by dropping the price of the older model. Could Microsoft be planning on completely phasing out the Xbox 360 Arcade model like Sony phased out the 20GB model?

It would make sense for the same reason Sony phased out the 20GB model and now only has a 80GB model and a incoming 160GB model (read here). Sony’s strategic reason for phasing out the lower hard drive speced PS3s is to focus more on downloadable content down the line.

With the recent partnership with Netflix, Microsoft may benefit from phasing out a hard drive-less model. One thing you want to also consider these hardware manufacturers really think and strategies alike. Just look at all the Mii-too situations we have going on with all three manufacturers.

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• Sony cuts 60GB PS3 by $100, introduces 80GB model to US