Source: Pictures purportedly from an upcoming K-Mart newspaper flyer originally posted on the High-Def Digest forums.

　　What we heard: Last August, Microsoft's plans to drop the price of the Xbox 360 in all of its configurations were leaked four separate times. The Hollywood Reporter ran the news first citing retail sources, then Toys "R" Us, Wal-Mart, and Circuit City all had weekly newspaper ads that prematurely found their way into the public domain. Needless to say, by the time Microsoft finally confirmed the cuts, few considered the news to be especially shocking.

　　History may be repeating itself, given that the supposed K-Mart flyer clearly shows a 20GB Xbox 360 system with a "new low price" of $299.99. Currently the 20GB model sells for a suggested retail price of $349.99. The scanned image shows only part of the Xbox 360 listing, and nothing from the rest of the ad save for box art of Civilization Revolution and 2K Sports' Prizefighter. Such pictures can be faked, but if this one was, the creator at least paid enough attention to duplicate the K-Mart circular's font as well as details like the twin-color blowout box announcing the price drop.

　　The person who posted the images says that the price cut should go into effect around July 6, a Sunday, likely meaning that the ad is intended to run in that edition of the newspaper. It's fairly common for newspaper ads such as this to be printed a week or more in advance of the publication date, and with Civilization Revolution set for release on July 8, the timing of this leak fits well. That's also the week before the big E3 Media and Business Summit in Los Angeles, a time when console makers traditionally try to generate momentum for their systems with big announcements.

　　Although it hasn't quite been a year since the last round of Xbox 360 price cuts, those were a bit mild ($20 on the Core and $30 on the Elite), and the intervening time frame has seen the Xbox 360 hardware lose considerable momentum to the PlayStation 3. According to figures from the industry-tracking NPD Group, the Xbox 360 beat the PS3 in US hardware sales every single month through the end of 2007. However, for the first five months of 2008, the PS3 has outsold the Xbox 360 three times, and was only a thin margin behind the Microsoft console for the other two.

　　Microsoft needs to spark system sales to fend off Sony's advancing PS3. A price cut is one of the simplest, most direct ways to encourage gamers on the fence to take the plunge. Right now customers are likely looking at a Blu-ray drive and built-in wireless support as features well worth the $50 difference between a 20GB Xbox 360 and a 40GB PS3. Widening that gap to a nice round $100 would no doubt make Microsoft's system a much more enticing value proposition for many gamers.

　　The official story: Microsoft hadn't returned requests for comment as of press time.

　　Bogus or not bogus?: Probably not bogus.