Sources are telling us that Microsoft could finally be ready to take the wraps off a new slim Xbox 360 at E3. The slimmed down unit would feature die shrinks coupled with a variety of additional cost cutting moves to drive the price of the console down. The initial thinking is that this might be an effort in conjunction with the Natal bundle that seems likely to be launched at E3. The slim unit could also be used to drive down the price point in an effort to reignite sales again.

Based on a variety of discussions that we have had with our sources, despite the wishful thinking we still find it unlikely that Microsoft would roll out a slimmer version of the console at E3. While we have seen some evidence that seems to support the existence of some engineering samples that have been made and tested, we just don’t think the timing is right. Unless some additional evidence comes our way before E3 that supports this, we have to tell you not to count on this happening at E3.