With the PlayStation 3 price cuts, 360 failure rates apparently well above consumer-acceptable levels, and Microsoft being forced to invest significant money into extending warranties, he may have a point. Moving to a smaller fabrication process would reduce manufacturing cost, reduce heat, and in the process, most likely improve overall reliability, thereby reducing after-sale costs to Microsoft.
Mr. Takahashi believe that Microsoft will launch the new chipset sometime in Q3 this year, hence Microsoft's comments that they have apparently solved their manufacturing problems.
Similarly, gamesindustry.biz reports that another analyst expects Microsoft to drop the price of the Xbox 360 Elite by US$80 and the Premium / Core by US$50, roughly AU$90/£40 and AU$60/£25, respectively.
Michael Pachter, from Wedbush Morgan, stated that, "We expect Microsoft to follow with a price cut of its own ... last week, Microsoft announced a slight Xbox 360 shipment shortfall and we do not believe that the company is prepared to allow Sony to erode its pricing advantage."
Lots of rumours everywhere - as always, E3 should be quite interesting.

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