Microsoft planning a $100 Xbox 360 price drop?

What we heard: Console pricing has been a big topic in the next-gen system wars. Those who gasped when Microsoft revealed that its premium Xbox 360 would retail for $399 probably swallowed their tongues when Sony announced its high-end PlayStation 3 would sell for $599. Nintendo's Wii, on the other hand, is targeting a price under $250.

Microsoft has found itself conveniently in the middle of the pack price-wise, offering better graphics and power than the cheaper Wii, and fewer bells and whistles (such as a Blu-ray drive) than the pricier PS3. However, with gamers all over the world still undecided about which console to take home for the holidays, Microsoft may want to sweeten the deal.

Taiwanese tech site Digitimes.com is reporting that Microsoft may cut the price of the Xbox 360's premium pack by $100, bringing it down to $299. The article cites Taiwanese OEM component makers, companies that are making parts for the Xbox 360, which claim to have negotiated deals with Microsoft to reduce production costs by as much as 20 percent. The cut in costs is attributed to increased production, decreasing rate of defective parts, and general price deflation of raw materials.

The purpose and timing of the alleged price cut is obvious--with Sony taking a lashing of criticism because of its $599 PS3 price point, Microsoft would love to turn up the heat on its main rival. Microsoft didn't launch the 360 a year early to come in second or third place again, and with its willingness to lose boatloads of cash to be the winner in the long run, a price cut could be the extra boost the 360 needs to come out on top.

Digitimes' source also says the price cut is in preparation for a $399 Xbox 360 premium bundle with an external HD-DVD drive, in an attempt to blunt Sony's Blu-ray drive-equipped PS3. At E3, Microsoft announced that the drive would be available this holiday season (but didn't announce a price), which would line up perfectly for a holiday bundle.

Don't run out and buy Van Helsing on HD-DVD just yet. Microsoft has previously said that no price drop on its console is planned this year, and it may tough out this holiday season with its previous price points intact. Another possibility is that Microsoft will announce some form of bundle with throw-ins, like the rumored $399 Project Gotham Racing 3 bundle, which allegedly includes the premium 360, PGR3, some Xbox Live Marketplace points, and a three-month Xbox Live account.

Bogus or not bogus?: Being the high-def film junkies we are, we're hoping it's not bogus. Unfortunately, the PGR3 bundle seems like a more likely scenario. Bogus.