Last week, rumors of a possible price drop for the Xbox 360 console started emerging after Xbox product manager, David Hufford, was quoted by Bloomberg saying the sweet spot of the market is really $199. On Microsoft's gamerscore blog, he recently denied such rumors claiming that his comments were taken totally out of proportion:

"I spoke to Bloomberg nearly two months ago and we were talking about NPD data that had just been released, and chatting generally about price points of consoles in the market. The comment, which is accurately reported, unfortunately has now been taken way out of context and being reported as if I am signaling a price drop. I was not, I am not," he said.

"With Xbox 360s selling well at their current price point, Elites selling out at $479, and an insanely great portfolio of games in the market, there's no reason to announce any kind of price drop anytime soon," Hufford added.
Apparently we won't see a price drop anytime soon; however, if Microsoft is to expand their demographic to reach a "a solid business with 90 million people" as Hufford previously stated, releasing more game titles aimed towards children and casual gamers and a price drop seems like a good place to start, specially with console manufacturing costs going down overtime.