usiness Week is reporting (and a contact at the company confirmed) that Microsoft will indeed be cutting prices on the Xbox 360. Taking a page from the Nintendo camp, the Arcade Xbox 360 SKU will now drop down to $199 putting the 360 as the cheapest of the three home consoles. The Pro SKU will run for $299 and finally the Elite will clock in at $399. The new prices will go into effect on Friday, Sept 5.

This strategy can be paired with the upcoming software update for the Xbox 360 Dashboard. The new system will be a much more user-friendly interface and experience with a total overhaul of the system. You can check out our preview of the new Dashboard from E3 2008 here.