Earlier this year rumors began to emerge that Microsoft was working on a motion sensing controller for the Xbox 360. While there’s been no official confirmation from the company, the aptly named “Xbox 360 Fanboy” site is now reporting that a “source close to Microsoft’s marketing department” told them about not only a $199 price cut for the console (which has been rumored before), but a motion controller pack-in too.

The new bundle will purportedly include the new Fall dashboard update, a 512MB memory card, as well as a selection of mini games developed by Rare designed to work with the new controller. Apparently the motion sensing controller will also be sold separately and be compatible with all existing models of the Xbox 360.

The bundle is expected to be released in time for the holiday season of 2008. Now obviously this is merely a rumor at this point, but it isn’t beyond the realms of possibility given Microsoft’s intentions to push into more casual territory.