Microsoft has countered Sony's Price cut with a project called Falcon.
This will feature "The said internal electronics will be composed of an IBM microprocessor and an AMD/ATI graphics chip that are manufactured in a 65-nanometer production process. We've already talked about this one before. Basically, these chips are similar to the 90-nanometer ones but are smaller and more efficient.

Takahashi added that this will ultimately solve the console's problems with overheating. Quite interestingly, the journalist also noted that Microsoft may opt to do a lot of things: put in the unsightly brick-style power supply inside, make a smaller version of the core or beef up the console even more."
Will this be enough to counter sony's price cut, lets wait and inf out.

Falcon is the name for the latest internal electronics in the Xbox 360. It will have an IBM microprocessor and an AMD/ATI graphics chip that are manufactured in a 65-nanometer production process. These are cost-reduced chips that do the same thing as their 90-nanometer predecessors, but they’re smaller.

Everyone knows that console makers cut the prices and costs on their consoles over time. But you may not be aware that the primary chips – microprocessor, graphics, and the Ana video processing chip – are the bulk of the cost of the machine. Microsoft started making the Xbox 360s in August, 2005, with a 90-nanometer process. It is overdue to switch to the newest technology, 65 nanometers, but that day has finally come. It may be some time — a year, maybe two — before it moves on the a 45-nanometer process.

If you cut the costs on the chips, you can cut the overall cost of the system. You get ancillary benefits such as using a smaller motherboard, more air flow inside the console, and the ability to take the big giant power supply in the Xbox 360’s power brick and put it inside the console.

Microsoft is in the process of qualifying the new Falcon chips and motherboard this summer. I expect it will launch Xbox 360s with the new Falcon innards this fall.

Final Blade via blogs.mercurynews.com »