Microsoft may be taking cues from Sony’s hardware strategy if a rumor stemming from technology site Arstechnica is to be believed.

The site’s source claims that Microsoft will announce a 60GB equipped Xbox 360 model at E3, which is to replace the 20GB configuration of old. In an effort to move the 20GB off store shelves, retailers will be cutting the price of it down to $299, which falls in line with previous reports, as well as an ad from K-Mart. Below is a snip from the email that Microsoft allegedly sent to retailers:

At E3 Microsoft will make an official announcement that we are dropping the 20GB pro console to $299… As we launch the 60GB SKU throughout July, the 20GB SKU will DISCONTINUE. You will see the new SKU on your 7/1 price list.

Doesn’t sound too far-fetched. If you recall, Sony made a similar move by introducing the 40GB PS3 model, while the 60GB was slowly phased out. Fact or folly? With E3 just around the corner, we’ll find out soon enough.

Mole: Microsoft to drop price on 20GB 360, make room for 60GB [Arstechnica]

Read more: Rumor: Xbox 360 To Receive Real Price Cut In September, Report: Microsoft Cutting Xbox 360 Price By $50 In “Coming Weeks”, Pachter: Xbox 360 Price Cut “Imminent”, Rumor: Xbox 360 To Receive Price Cut In July, E3 2007: Microsoft Aims To Hit “Mass Market Price”