Michael Pachter of Wedbush Morgan Securities was the most optimistic in his predictions, saying that he expects Microsoft to drop the price of the Xbox 360 Elite from $479 to $399, the Premium from $399 to $349 and the Core from $299 to $249.

In his note to investors Pachter mentioned "While the Elite has a 120GB hard drive and HDMI cables, it does not have WiFi built in nor does it offer Blu-ray playback capability, with both standard features for the PS3. Similarly, we think that the $499 PS3 compares quite favorably with the $399 Pro 360 model, which has only a 20GB hard drive and no HDMI output. Because of this favorable comparison, we believe that Microsoft is all but compelled to cut prices"

Other analysts are also expecting a price drop on one or more SKUs, between $50 and $100. According to Pachter, Microsoft will be announcing the price drop at their Tuesday night E3 press conference. Shacknews will be covering the event live.