Like a scripted play, rumors have begun circulating that Microsoft is preparing to reduce the price of its Xbox 360 consoles to better compete with Sony's PlayStation 3 leading into the holiday season. Sony instituted its price cuts last week, slashing $50 off the 160GB and 320GB models, which are now $250 and $300, respectively. Those rates are extremely competitive when you look at Microsoft's prices: $200 for a 4GB Xbox 360 and $300 for a 250GB model.

Considering that value separation, it seems inevitable that Redmond will slash prices or introduce special offers to lure holiday shoppers. The first tangible sign of a potential reduction surfaced today in a Walmart circular. Joystiq has published a listing that is set to appear in next week's flyer which advertises a $50 "rollback" on the Xbox 360 4GB Kinect bundle ($300 to $250). As timely as that maneuver seems, Microsoft has denied involvement.

Redmond contacted Joystiq to say that "Walmart made an independent decision to implement this temporary price cut." "We've made no announcements about price drops, and do not discuss our pricing plans in advance," Microsoft noted, adding that its Xbox 360 has been the top-selling console in the US for 13 of the past 14 months, outpacing the Wii and PS3. Having experienced "record growth," Microsoft expects 2011 to be the biggest year in Xbox history.

Today's comment reaffirms statements made by European Xbox boss Chris Lewis in a VG247 interview last Friday. When asked if Microsoft felt any pressure to address Sony's price cut, Lewis simply said "no." "As you can imagine, we plan for these scenarios all the time. For me to sit here and say that was a big surprise would be a lie...We're happy with our position. While we're not complacent about the competition, I wouldn't trade places," Lewis said.