As we expected, Microsoft is slashing the prices on the older Xbox 360s to make way for the new slim version of the console. While Microsoft has apparently not yet announced that the older versions of the console are discontinued, we suspect that they will not officially discontinue the older version of the consoles till they are able to clear out the current inventory they are stilling on, as well as what is left in the channel.

Basically, the move takes the price of the Arcade and Elite and slashes both of them by $50 to $149 and $249, respectively.  The Limited Edition consoles will also see a price drop with their $399 pricing now at $349. The Limited Edition consoles that appear to be included are Modern Warfare 2, Splinter Cell, and Final Fantasy XIII. Of course, this only applies to retailers that still have Limited Edition consoles left on the shelf.

Our sources tell us that it is likely that Microsoft will make a move to discontinue the older 360 units in favor of the new slim consoles. It is very likely that Microsoft will announce new bundles for these units, but we will have to wait till they work their way through what inventory is remaining.

Whispers to us seem to suggest that the number of actual older consoles left might not be as high as many suspect, so the transition to the slim Xbox 360 might happen more quickly than we might think. In the meantime, if you are looking at a second console or a replacement, the prices have never been lower.