Microsoft confirms pricing for the Xbox 360 external HD-DVD drive has been reduced from $179.99 USD to $129.99 USD.  The price cut is fairly substantial at $50 USD, and follows Toshiba's own (comparatively minor) retail price reductions for its standalone HD-DVD player lineup.  Select retailers also offered a number of free HD-DVD movies with a purchase of an HD-DVD player.  It's widely believed Toshiba's move was spurred by a certain motion picture studio suddenly opting to exclusively distribute its titles on the competing Blu-ray format (developed by Sony) this May; with the Xbox 360's lack of Blu-ray support, perhaps Microsoft was equally compelled to milk its HD-DVD component for all its worth.

That said, Microsoft has never really pushed HD-DVD for Xbox 360 gaming.  Company reps themselves have earlier implied that even Blu-ray support would not be out of the question for the console, should it become the defacto optical disc format for entertainment in the near future.

It's a bit of extra money in the pocket of Microsoft's gaming division in any case, should it start moving Xbox 360 HD-DVD drives in quantity regardless of motives.  Indeed, Amazon managed to sell out of its own stock of Xbox 360 HD-DVD drives when the online retailer ran a promotion which priced the peripheral at an even lower $79.99 USD.  Will Microsoft's new MSRP keep gamers biting?