Microsoft and Sony are still fighting it out for the scraps Nintendo leaves behind as it dominates the console sales figures. The Nintendo Wii is handily selling more consoles than the Xbox 360 and PS3 can move.

For a long time, the Xbox 360 outsold the Sony PS3, but over the last few months, that fortune has reversed and now the PS3 typically accept outsells the Xbox 360. Sony was able to gain ground on Microsoft's Xbox 360 and eventually pass it in sales thanks to a couple of factors -- price drops and storage capacity increases. In July, Sony announced that the 80GB PS3 would sell for $399 and at the same time Microsoft announced that it would drop the price of its 20GB Xbox 360 by $50 to $299.99.

Yesterday, Sony announced a new 160GB PS3 bundle that would sell for $499 in America. Microsoft is looking to fight back against the loss of market share at the hands of Sony with capacity increases and price drops of its own. DailyTech reported at the beginning of August that rumors were circulating that the Xbox 360 Arcade would drop to a price of $199.99 in September.

It appears that those rumors have been substantiated with a flyer from RadioShack surfacing that shows that the Xbox 360 Arcade would be dropping by $80 to $199 starting on September 7. The same flyer shows that the Xbox 360 Elite would see a price drop from $449.99 to $399.99.

DailyTech reported at the beginning of August that Dell was listing the Microsoft Xbox 360 Elite at a price of only $299 -- $100 cheaper than what RadioShack is showing the price to be starting in September. To get that discount you had to move fast, Dell currently shows the same bundle at $449.