First, Microsoft announces a $50 price drop to $299 to move out all of the old 20GB Xbox 360 units, and then they announce that they will release a new Limited Edition Red and Green version of their wireless controller that is slated for release at the end of August.

The new Limited Edition Red and Green Xbox 360 Wireless controllers will include the Play and Charge cable and rechargeable battery all-in-one bundle, with a retail price of $64.99. The rechargeable battery pack will be red or green in color to match the controller and the red version will feature black trim with the green version having grey trim.

Beyond the standard features found on other Xbox 360 Wireless controllers, these Limited Edition controllers will allow for adjustments to be made to the vibration to lengthen battery life; and the controller features redesigned left and right shoulder buttons that should provide improved feedback and performance.

In other news, Microsoft announced that they have teamed up with Netflix to give Xbox Gold subscribers who also happen to use the Netflix service the ability to stream movies and TV shows to their Xbox 360 at no additional cost. In addition, subscribers will also be able to stream the content to other devices that are compatible on their networks.

The announcement of the addition of Netflix streaming to the Xbox 360 comes as a welcomed surprise and it gives Xbox 360 owners a vast library of content to enjoy. This gives it a clear advantage in available video content over the PlayStation 3. In addition, it puts Netflix clearly in the lead against its rivals that are trying to find ways to stream content into the home, and it does not require that consumers purchase a streaming device from Netflix because they can use the Xbox 360 that they already have.

The fall user update will feature a total makeover to the Xbox 360 interface with new avatar features. In addition, after the fall update, users will be able to load games on to their hard drives for better performance and quicker game play.

Beyond this, Microsoft showcased its fall title lineup, which includes: 1 vs. 100, Lips, Guitar Hero World Tour, Rock Band 2, and Scene It? Box Office Smash, Banjo-Kazooie: Nuts & Bolts, DanceDanceRevolution UNIVERSE 3, UNO RUSH, and Viva Piñata: Trouble in Paradise.

Microsoft also talked about the following titles that will be available for the Xbox 360 in 2008 and beyond that includes: Final Fantasy XIII, Galaga Legions, Geometry Wars: Retro Evolved 2, Portal: Still Alive, South Park, Fable II, Gears of War 2, Halo Wars, Infinite Undiscovery, The Last Remnant, Resident Evil 5, STAR OCEAN: The Last Hope, and Too Human. Also of note, the Xbox 360 will be the only platform with new exclusive content for Grand Theft Auto IV that will consist of new downloadable episodes.

While many of the big companies passed on this year’s smaller E3, it is obvious that Microsoft still wanted to use E3 as the launching platform for the fall selling season. As we suspected, Microsoft made no announcement regarding price reductions on either the Xbox 360 Arcade or Xbox 360 Elite systems. Still, whispers persist that Microsoft is preparing to be a major challenger in the console wars this holiday season as it does have wiggle room on the price of Xbox 360 consoles.