I don't think they had a heck of alot of choice... With GameCube already at the lower price, and with Sony having dropped to that pricepoint as well, Xbox would have to follow - they'd shoot themselves in the foot if they didn't.
Myself, I'm not a fanboy of any system. X-box has it's downsides, but also has the edge on other points... <shrug> I figure they'll both do well.
**EDIT** vat_man - don't take that the wrong way - I wasn't implying you were a fanboy. (I just re-read the message and it looked that way)
PS2 is now 200? Wow! Pretty soon I can have a Linux PS2 and a regular PS2 with the hard drive! Wow! Hopefully once the programming kit comes out it'll drop real soon!