Whispers that we are hearing suggest that Microsoft will slash the price of the Xbox 360 by $50 in the spring of 2011. Analysts seem to think that Microsoft will lead this charge, as the outcome would likely be very positive for the platform as well as software sales.

The motivation, however, might run deeper than that, with Nintendo dropping the 3DS into the North American and European market; and Microsoft may want to steal some of the thunder by slashing the price and promoting Kinect. Sources tell us that nothing is set in stone yet, and (of course) Microsoft isn’t even willing to suggest that it might happen.

Growing the installed user base on the Xbox 360 will be important for Microsoft and it hopes that Kinect will help with this process by giving consumers another choice. Much of the current Kinect software is targeted at a new audience and a price cut might attract those on the fence about a 360 purchase.

Naturally, our sources think that if a cut will come it will be in March of 2011, as it is doubtful that Microsoft will want to wait much longer than that to slash prices. It is expected that Sony might follow Microsoft’s lead on dropping the price, but so far no one seems to be hearing that kind of talk.