The 360 has been a powerhouse regarding software sales and even if the hardware sales are "ok", they are nowhere near where they could be.

According to this site, the new prices, which will be in effect in september, will be these:

Early Sept price reduction on X360 hardware:

• Arcade (no hard drive) to $199
• Pro (60GB) to $299 
• Elite (120GB) to $399

I think that its imperitive for MS to reach the $199 mark to really see the effects of sales towards casuals. This coupled with a lowering price for their peripherals, the HDD in particular, should not be as expensive as it is. Im sure MS has space to change this price in their profit margins.

Anyways, if true, this will make the holidays very interesting.