Microsoft Corporation announced today that it will be reducing the cost of the 20-gigabyte model of the Xbox 360 "while supplies last", meaning that remaining supplies of said model will cost $249 until the units run out. To coincide with the phasing out of the 20GB model, Microsoft is introducing a 60-gigabyte version of the 360 that will cost the same as what the 20GB unit formerly cost: $349. 

Xbox director of product management, Albert Penello, heavily emphasized the point of the 60GB costing the same amount as the 20GB model it is replacing, stating that "we know consumers need more and more space to store the amazing digital content Xbox 360 offers, and we’re giving it to them at no extra charge."

In a bit of an aside, Microsoft is not going to discount its $279 Xbox 360 Arcade model (which comes with no hard drive) or its $449 Xbox 360 Elite (which features a 120GB hard drive), contrary to prior rampant rumors.