Rumors are certainly a funny thing. They come in all shapes and sizes with varying degrees of actually coming true, but many of them are simply false. Typically when you hear "rumor" and "Microsoft" in the same sentence, you instantly think of the Next Xbox. This is not the case today, as the newest rumor pegs Microsoft as launching a $99 Xbox 360 on a two-year contract. The system would sell in Microsoft Stores and be a 4GB model with a bundled Kinet sensor, Xbox Live Gold, a two-year warranty, and potentially streaming content from cable or sports providers. A two-year contract is typically associated with a cell phone and not a game console, but I could see this one becoming true. There would be an early-termination fee as well, although the amount was not mentioned at this time.
Supposedly Microsoft will charge $15 a month for the subsidized 360, which comes out to $459 over the course of the two years. This is a little more than the cost of a 4GB console, Kinect sensor, and two years of Xbox Live Gold on its own ($420), so it will be interesting to see who goes for the two-year contract option.