The rumored Target ad, pictured above, has been confirmed by Microsoft in an interview with Kotaku. Aaron Greenberg, Director of Product Management for Xbox 360, says that the Xbox 360 Pro will be dropped to $250 while supplies last. Once they run out there will only be two 360 models: The Arcade (for $199) and The Elite (for $299).
The new pricing will go into effect on Friday, which is presumably designed to discourage people from going out and getting new PS3 Slims (which will sell for the same price as an Xbox 360 Elite).
Said Greenberg regarding the timing:
"I think it's a bit coincidental, but it's also somewhat logical with both (Sony and Microsoft) making price adjustments at this time of the year because we are turning the corner of the holiday season."
He went on to confirm that Microsoft has no plans for a slimmed down version of the Xbox 360.