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Xbox may drop to $99 by late May

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John Nordell/Staff/File

(Read caption) Best Buy 'blue shirt' Jamessa Cooper (right) helps customer Amin Ahmed exchange a XBOX 360 core system for a XBOX 360 premium system. A new version of the XBox could mean dramatic price cuts on the older system by net month.

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According to various tech sites, Microsoft will announce its next-gen Xbox gaming console on May 21. As with any new electronic doodad, the Internet is all abuzz with rumors about it. Will it require an always-on Internet connection? Will it play Blu-ray? Will it cost $500? Answers: Maybe!

But since we're deal-sniffing detectives, the most interesting rumor for us is a tangential one that was first floated by Paul Thurrott of Supersite for Windows. He claims that upon the release of the next console, the current Xbox is going to plummet in price to $99.

A $99 Xbox Would Threaten a Ton of Media Devices

Firstly, a $100 Xbox would put the present day console on par price-wise with the open-source, Kickstarter upstart OUYA. Could the OUYA, a console based around the Android platform, compete with a console that's just as inexpensive, but already has a catalog of thousands of games? Further, there are rumors that Valve is also going to release a cheap, set-top video game system called Steam Box. With a $99 Xbox, their marketplace would become a whole lot more difficult to enter.

Secondly, think about what a cheap Xbox would do to the content streaming, set-top box market. The Xbox would be priced in-line with the Apple TV and the latest, highest-end Roku, although in order to access streaming content (like HuluNetflix, Amazon Prime, and a bunch of sports channels and extras), a user would have to either purchase an Xbox LIVE subscription (priced around $40 for one year, if you get a deal) or pay a monthly fee that some have suggested will be required with the updated consoles. That said, despite that additional fee, you'd get Xbox's streaming functionality plus the ability to play DVDs and video games.

Yes, consumers who are already invested in the Apple ecosphere will opt for Apple TV, but for those who are new to the whole experience and looking for the best bang for their buck, a $99 Xbox looks mighty attractive. However, people who don't want or need to play video games or DVDs may turn to Roku or Apple TV as cheaper options since they don't require a LIVE-like subscription.

Regardless of speculation, our recommendation to anyone looking to buy an Xbox 360, Roku, Apple TV, or OUYA should probably wait until May 21. At that point, we should have a more clear idea of what Microsoft is planning to do. It's not that long to wait, and if you do, you might end up saving money or purchasing a better product for your cash.

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