After long declining to comment on "rumors and speculation" about the Xbox 360's $299 price cut--even when such "rumors" came from the Wall Street Journal--Microsoft has finally come clean. Today, the company formally announced it is dropping the price of the 20GB Xbox 360 Pro to $299 in the US and Canada, down $50 from its prior $349 cost.

However, the price cut isn't as straightforward a story as had been assumed. In a move reminiscent of Sony's discounting and then discontinuing of the 60GB PlayStation 3 at last year's E3 Media & Business Summit, the $299 price point will only be in effect while supplies last. That's because Microsoft is phasing out the 20GB 360 and replacing it with a long-rumored new model with a 60GB hard drive. The 60GB 360 will go on sale in "early August" at the 20GB's former $349 price point.

In a press release titled "Xbox 360 Console Now Offers Triple the Storage," Xbox director of product management Albert Penello played up the fact the 60GB 360 will cost as much as the 20GB used to. "We know consumers need more and more space to store the amazing digital content Xbox 360 offers, and we're giving it to them at no extra charge," he said.

Contrary to other rumors, Microsoft is not discounting its other two Xbox 360 models: The $279 hard drive-less Arcade and the $449 120GB Elite. Today's move will likely only have a temporary effect on the current console sales struggle, which has seen the PS3 running neck-and-neck with the 360 this year. Currently, Sony's non-backwards-compatible 40GB PS3 costs $399, while the full-featured 80GB PS3 retails for $499. The cheapest and most popular console on the market remains the single-SKU Nintendo Wii, which retails for $249.