Since its launch, Microsoft’s Xbox 360 has been plagued with widespread product failure reports due to overheating issues in an estimated 30 percent of all consoles sold, forcing the company to shell out big time to fix the affected units. Microsoft isn't standing around with its arms crossed though.

According to Dean Takahashi, the man who first confirmed the Xbox 360 IPTV as well as the Xbox 360 Elite, Microsoft plans a move, codenamed Falcon, to use 65-nanometer chipsets for the 360 along with a redesigned motherboard and a new GPU. The new chips are not only smaller and about 50 percent cheaper to produce than their current 90nm counterpart, but they also run cooler.

Aside from the obvious benefits of the 65-nanometer chipsets running cooler, a few other issues come to mind now that Sony has cut the PS3’s price by $100. Seeing that the 360 would benefit from lower manufacturing costs, a price drop doesn’t sound too far-fetched. The question is when will Microsoft cut the 360s price? I don’t think it will happen as soon as this week during E3, however, a price cut in time for the holiday season makes sense.