Adding to widely accepted speculation that the Xbox and PS2 will see price cuts to $129 ahead of the E3 trade show in May, an American analyst has now suggested that the Xbox will drop to $99 before autumn.
American Technology Research analyst PJ McNealy issued a research note earlier this week which agreed with the speculation from other analysts and publishers suggesting that both consoles will fall to $129 by E3, but added that Microsoft will "then cut the Xbox further to $99 in the late summer."
This kind of move on Microsoft's part would give Xbox sales a major boost in the run up to Christmas 2004, and the company may indeed be considering it in light of Nintendo's hugely successful quarter at the end of last year, which was driven by a GameCube price cut.
With next Christmas likely to be the last chance that the current generation of consoles have to make a major impact on their installed bases before public attention turns to the next generation machines, it's easy to see why slashing the price and going all-out for market penetration would be attractive to Microsoft.
However, McNealy's speculation needs to be taken with a pinch of salt regardless. Microsoft is in the habit of considering a number of different approaches to market issues, and floating a number of them in the public eye to measure opinion - so even if the company actually is discussing the possibility of a $99 Xbox next Christmas, that doesn't mean it'll materialise.
Intriguingly, McNealy also suggests that the successor to Xbox may appear towards the end of 2005, rather than in 2006 as is commonly expected. Although this timeline is almost certainly possible from a hardware standpoint - key deals with component providers such as IBM and ATI are already in place - it would be a lot tougher for Microsoft to put software support in place for a 2005 launch.
Most developers will only get their first glimpse of the console's specs at GDC in San Jose at the end of March, and even key third-party partners are only now being briefed on incomplete Xbox 2 specifications. It's certainly not impossible that Microsoft's studios, and some third parties, could have Xbox 2 software ready for late 2005 - launch software has been produced on tougher timelines than that in the past - but with the team working on the next console still allegedly undecided over key points of the specification, it would seem a foolhardy move for the company to try and aim for a Christmas 2005 date, no matter how much of a lead over rival Sony this would give them.