What will the Xbox One not have to make a price drop happen.

500GB is the low end at this point. Cutting size to cut costs after a certain point results in diminishing returns, and in some cases price increases, because certain sizes aren't even being made anymore. A new original 20GB 360 HDDs would probably cost more than the 500GB drive at this point. Production lines winding down are probably the #1 reason for size increases during this past generation.

So no, they won't go down from 500GB.

Kinect is also going nowhere. Not only did they make it the cornerstone of their UI to the point it made sense to force inclusion in the box when they could easily ask for $100 separately and not appear to be $100 more, but if they did backpedal from it, literally everything they talked about during E3 would be gone and they'd have zero talking points. "What's new with Xbox One? Kinect and a digital library." "Oh wait, those are both out? Well, um, I don't know..? Blu-ray, I guess..?"

They won't cut costs just yet, but may include free games to offset perceived cost. They also might be smart and start selling backward compatibility packs. Right now BC is the only thing that might make me change my mind about not getting one. As it is they're releasing an HD Wii that I have zero investment in, because they flushed my XBLA library for whatever reason.

this is a strange question. i don't think they'll mess with the hardware to cut costs at this point- they're too far gone, and their ship date is quickly approaching. you'll see a on-contract subsidy before they cut the hard drive or kinect.