Source: Tech and gaming news site Ars Technica.

　　What we heard: Sony has drawn flack for the PlayStation 3's sticker tag from the moment the top-tier console's $599 price was announced in 2006. And while Sony has released an array of hardware configurations to bring down the price, the PS3 consistently scores the bronze in the US' three-way current-generation console race. Last week, Activision ratcheted the price war rhetoric up a notch, threatening to drop support for the PS3 and PSP as early as 2010 if Sony doesn't enact a price reduction for its flagship console. Currently, the cheapest PS3 hardware SKU is the 80GB model, which was introduced during E3 2008.

　　Analysts and publishers alike believe Sony will eventually cut the PS3's price sometime during the back half of the year, though the same could be said of 2008. This time, though, industry watchers may be right, as Ars Technica's reliable tipster has informed the tech news site that Sony will cut the PS3's price as well as introduce the 120GB PS3 Slim this fall.

　　Ars Technica's source had no specific information on how much the consoles will cost or whether or not Sony will alter its SKU offerings. However, the source did say that Sony is currently in the process of flooding retail with the 160GB PS3 SKU, while at the same time limiting supply of the 80GB model. The source noted that most retailers have about a 60-day supply of the 80GB model left in stock.

　　Were Sony to proceed with a price cut, the console maker's newfound competitiveness may be short-lived. Ars Technica's source notes that Microsoft may respond to a PS3 price cut with a SKU jiggering of its own. According to the tipster, Microsoft plans to phase out the midlevel $299 Xbox 360 Pro in July or August, with the publisher introducing a number of attractive software bundles to help move systems. Once supply has sold through, Microsoft will essentially replace the 60GB Pro with the 120GB Elite model, cutting the price of its top-tier system to $299 in early September, the source said.

　　Of note, Ars Technica's source has successfully sleuthed out a number of retailer-related happenings in the past. Most applicably, the source precisely called Microsoft's across-the-board hardware price cuts for the Xbox 360 Elite, Pro, and Arcade in September 2008.

　　The official story: "This is completely based on rumors and rampant speculation."--A Sony Computer Entertainment representative. "Microsoft does not comment on rumors or speculation."--A Microsoft representative.

　　Bogus or not bogus?: Both the Xbox 360 and PS3 (and the Wii, for that matter) have seen weakness at retail recently, with Electronic Entertainment Design and Research analyst Jesse Divnich telling GameSpot earlier this month that all three consoles have "reached saturation at current price points." Therefore, it wouldn't be unheard of for either Microsoft or Sony to be reevaluating their SKU lineup and strategy. Add in the track record of Ars Technica's source, and this one is looking not bogus.