Today, making a major follow-up to its recent slashing of the price of Xbox 360 models in Japan, Mcrosoft went one step further and announced that starting this Friday, September 5^th, the price of all Xbox 360 models will be cut, leaving the cheapest model, the Xbox 360 Arcade, priced at a tantalizing $199 USD/CAD.

“ We are thrilled to be the first next-generation console on the market to reach $199, a price that invites everyone to enjoy Xbox 360,” said Don Mattrick, senior vice president of the Interactive Entertainment Business at Microsoft. “Xbox 360 delivers amazing performance at an extraordinary value with the leading online service and best lineup of games and downloadable movies available from a console. The majority of consumers make the decision to buy consoles once the price falls to this mark, making this an important milestone for consumers and the industry.”

Microsoft says that history shows over 75% of all console sales happen after a unit's price falls below the $200 mark. If that's correct, we could begin seeing the sales of the Xbox 360 Arcade taking a massive leap, but what about the other models? The Xbox 360 Premium/Pro will now be priced at $299 USD/CAD while the Xbox 360 Elite will go for $399 USD/CAD. If the company's history is correct, that means the most popular Xbox 360 model, the Premium/Pro, which is picked most often because of its “total package” bundling, would only be slightly more appealing.

Either way, this puts the Xbox 360 Elite in a very competitive position against the Playstation 3, as the lowest/only current model of the Playstation 3, the 80GB model, costs $399 USD/CAD, and the Xbox 360 Elite is the “top of the line” Xbox 360 model, and the new 80GB is not backwards compatible with Playstation 2 or original Playstation software. Even with rumours still circling about a new 120GB PS3, the likelihood is that it would cost $499 USD/CAD at this point, so, as far as pricing goes, Microsoft has quite the advantage. If only it could get the reliability thing down.