According to this Hollywood Reporter story, a “major retailer” has confirmed that Microsoft will drop the price of Xbox 360 by $50 at E3.
From the piece:
Microsoft will cut the price of its most popular Xbox 360 model, the 20GB Pro, by $50 to $299 in the coming weeks, game industry sources have confirmed.
Microsoft would not comment, but a major retailer, which requested anonymity, said the price move will come before the major video game trade show, E3, which runs July 15-17 in Los Angeles.
More through the link. Take it as a given that this is true.