When Microsoft cut the prices on its Xbox 360 hardware earlier this month, many wondered if the company would also drop the price on its 120GB hard drive for consumers who want more storage space. Shortly after the price reduction went into effect, a number of retailers began listing the hard drive at the new price of $149 (previously $179).

Now Microsoft has confirmed that this is an official price drop as well. "We reduced the price of the Xbox 360 120 GB Hard Drive to $149 in conjunction with the recent Xbox 360 console price drop. We believe this offers consumers even greater value when selecting accessories that meet their individual gaming and entertainment needs," a spokesperson told GameDaily BIZ.

Considering that the Arcade SKU is now just $199 and the Elite SKU is $399, it would seem to be a better value for consumers to pick up the Arcade unit and a separate 120 GB hard drive. Both SKUs have wireless controllers and HDMI ports, but the Elite actually comes with an HDMI cable. Still, nowadays you can pick up an HDMI cable online for $10. The Elite also is colored black unlike the other models, but it doesn't come with five free Xbox Live Arcade titles.