Microsoft Corporation (NASDAQ:MSFT) has confirmed that they are cutting the prices of the Xbox 360 by about $100 as revealed by the leaked Target circulation ad.  This matches the price drop that the Sony PlayStation 3 made last week.

Both the Xbox 360 Elite and the PlayStation 3 costs $299.  The price drops apply worldwide, but varies based on currencies.  Microsoft currently has 3 versions of the Xbox 360 at three different price points.  The Xbox 360 Pro will eventually be phased out but will cost $249 while supply is available.

The Xbox Arcade, which does not have a hard drive currently costs $199.  The price cuts will be effective by this Friday.  The Nintendo Wii has not announced any price cuts and will stick around the price point of $250.

Over 31.4 million Xbox 360 consoles have been sold thus far.  The PlayStation 3 has sold about 23.7 million units, and the Nintendo Wii sold about 52.6 million.

Someone at the big red retailer has leaked a circulation ad that reveals future prices for the Xbox 360 Pro and the Xbox Elite.  The Xbox 360 60GB Pro system will cost $250 starting later this week and the 120GB price will drop to about $300.  These prices cuts are not surprising because last week, Sony released the PS3 Slim and cut the price of the original PS3.