Microsoft is likely to offer a new Xbox 360 slim model, 250GB hard-drive and motion controller Project Natal in a hardware bundle for $299 by the end of the year.
That's according to Wedbush Morgan analyst Michael Pachter, who also suggested that should Microsoft lose significant market share to Sony in 2010, it could cut the price of the current Xbox 360 before the end of the summer.
"At a minimum, we anticipate the introduction of a more feature-packed Xbox 360 as the standard SKU in late 2010 (likely with a 250GB hard drive) at the same $299 price point, and think that Microsoft will cut price before the fall only if it begins to lose significant market share to Sony," Pachter told investors.
"It is far more likely that we will see a slim version of the Xbox 360 with a 250 GB hard drive and with Project Natal bundled into the box while maintaining the $299 price point, especially if Sony does not lower the price of the PS3 by the time Natal and Sonys Move controllers launch in the fall."
A slim Xbox 360 is currently only a rumour, although images currently doing the rounds are offering a convincing argument for a new model console from Microsoft.