One speculation leads to another, with regard to the possibility of a price drop for Microsoft's Xbox 360. Ars Technica reports that a reliable source has confirmed a Kmart advert which indicated a US$ 50 price reduction for the 20 GB model of the console.

The source also noted that Microsoft is planning the release of a new Xbox 360 SKU by this month. Quoting the part of the source's statement:

At E3 Microsoft will make an official announcement that we are dropping the 20GB pro console to US$ 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.

While we're not too sure regarding the speculation on the  60GB unit, The Hollywood Reporter and a retailer previously backed up the possibility of a price cut for the 20GB SKU. Regardless, we'll be leaving this report in the rumor mill, at least until more substantial information can be found.