Spokespeople for Microsoft remain tight-lipped about the details of the announcement, however US analyst Tony Gikas has stated that he expects Microsoft will cut the price of its Xbox game console by US$30.
The Xbox consoles debuted on the Australian market at a retail price of AU$649, with the price dropping to AU$399 mid 2002.
The console currently sells for a standalone price of AU$299, however bundle price packages that include games and various pieces of hardware are also on sale.
First-release Xbox games retail from around AU$89 to AU$99 depending on the vendor; there has been no mention of a reduction in games prices.
Microsoft's biggest competitor in gaming, Sony Playstation 2 (PS2), says it has no plans to reduce the price of its console if Microsoft lowers Xbox prices.
A spokesperson from Sony Computer Entertainment Australia said the company already has a discount offering available, with a retail price bundle of AU$329.95 that includes a platinum game and DVD remote, equating to saving of around AU$100.