Microsoft Xbox 360 (Image: Amazon)

Microsoft's rumored $99 Xbox 360 has just become very real. Naturally though, with a drastic price reduction there are a few catches. For $99 you'll get a 4GB console along with the Kinect motion-capture sensor. The catch is you also have to agree to a two-year, $15-per-month Xbox Live Gold Contract. Just as with your cell contract, if you decide to opt out early, termination fees will run you anywhere from $250 to $12, depending on how much time is left.

If you do the math, after two years, this "deal" will cost almost $460, compared the regular purchase price of just $299 for the bundle and two years of Xbox Live at $59.99. Consumers who don't have the cash on hand for the $299 bundle might be enticed by this offer, but in the long run, it's not as cost-effective.

For now, this "promotion offer" is only available at Microsoft's official retail stores, of which there aren't many.  It's still unclear if the software giant will expand this experiment into its online store or other electronic retailers. Trying to capitalize on the same strategy used by cellphone carriers, Microsoft hopes this new promotion will entice consumers.   But only time will tell if this experiment works.