Microsoft says the cuts aren't related to Sony's move. The official announcement specifically mentions the release of Madden NFL 08, which it notes was the top selling console game last year.
"There is nothing too shocking about this," said Michael Gartenberg, an analyst at JupiterResearch. He said it's normal for companies to cut console prices between one and two years after launch.
The analyst added that the $50 price cut will bring in a whole new group of customers who ruled it out at the higher price, and that Microsoft should enjoy increased sales immediately - even though the official holiday shopping season is still months away.
Microsoft also said that the green and gold "Halo 3"-themed console, will go on sale in September for $400.
Sources:
Associated Press
Microsoft