eugene, you keep thinking that Sony won't match but they will match. They will not have a choice in the matter, regardless what you say about them making profit. If they didn't match they would get blasted out of the water and lose all market share and therefore wouldn't get sufficient PS3 sales to turn profit anyway.

Sony will match any Microsoft price cut, simple as that.

I think predictions about price drop (like the one in the OP) are just senseless.
Same is true about the PS3.

price drop : yes, it is beter for the sales
but it is so worse for the wallet ...

Sony has quickly dropped the price by 100$, without any BIG TITLE around (no MGS4, delayed game, no GT5) because they were in the RED, the BIG RED !

At the opposed, Microsoft made a price drop of 50$ when Bioshock was released and with Halo3 around the corner.

I believe, all the next price drop will be similar for sony and Mirosoft :
50$ and big AAA title around.

For example, for Sony, I m thinking about MGS4/GT5/GTA4 release next year.

I dont think Sony can match the price cuts because of the blue ray player. The Xbox hd dvd add on alone is $200 and the Ps3 is gonna be $250? They could do that, but im imagining they will endure bigger losses than the original Xbox ever had. Last quarter they only reported selling 1.3 million units and lost over $800 million dollars. And that was at $500-$600 price points and with the PS2 and PSP profits included. They already lost billions on PS3 as it is. I dont think they are in position. Whereas the 360 now has the market penetration and software sales to justify any price cuts. They sell so many games, accessories,and make a killing on Xbox live related things. They are also over 2 years old meaning their prices must have come down considerably by now.

Eugene, you keep thinking that but it was people who think like you that said there would be no 40GB, no Japan price cut, No EU price cut, No US price cut etc... and yet here we are with Sony doing whatever it takes to maintain their market share.

Whatever, you keep thinking that but history dictates that Sony will do whatever it needs to do to maintain market share even if that means taking large losses.

Either way, take it to the bank that the 40GB will be $300-350max once MGS4 hits store shelves. 

+1000 for jhlennon

you can also add the same people who saied Microsoft will make a price cut to counter Sony, but they have done nothing.

Why ?

1/ I dont know
2/ maybe they really want to earn money this generation so they wanted to save their wallet a little (since the Xbox360 is still selling good in europe and very good in NA, no price cut needed)

i think microsoft went with the 50 cut so that the second price cut around gta can be a massive, everyone on the fence buys one, kind of cut. thats the game that will usher in a bunch of ps2 owners into the next gen. a 200 dollar arcade would be just the thing to push them into the 360

If i were sony i woudl take my lumps in north america and work on getting the rest of the world. blu ray adoption is the carrot that the gaming depot can wave infront of shareholders questioning gaming losses.

i don't say that too loud if i were you, just like microsoft their shareholders always keep an eye out. microsoft is profitable now sow they don't worry about a pricedrop. sony on the other hand is in the red, shareholders won't be happy if they will be more in the red.

anyway that is how i see it, i could be wrong

"""i think microsoft went with the 50 cut so that the second price cut around gta can be a massive, everyone on the fence buys one, kind of cut. thats the game that will usher in a bunch of ps2 owners into the next gen. a 200 dollar arcade would be just the thing to push them into the 360"""

==> I m maybe stupid,
but dont you think GTA4 is typically the type of game that will need an harddrive to be played ? in fact, the same harddrive that is not present in the Xbox360 arcade (core) ?
but I agree that GTa4 will be the big event of 2008.

"If i were sony i woudl take my lumps in north america and work on getting the rest of the world. blu ray adoption is the carrot that the gaming depot can wave infront of shareholders questioning gaming losses."

==> hum, wait
you want Sony to run away from NA market ?
last week sales :
NA : +150k
>
PAL+japan : 150k
so many reasons to run away from NA ...

lilbellule,
If memory serves me, the arcade comes with a memory card, so it shouldn't be an issue for saved games or anything like that. The only issue that they would have would be the downloadable content, but people buying the arcade model might not be interested in DLC anyway.

In the UK, the 360 prices are as follows:

• Xbox 360 Arcade - £189.99
• Xbox 360 Premium - £239.99
• Xbox 360 Premium 2 Games Pack - £259.99 (Forza 2, Viva Pinata & Extra Controller)
• Xbox 360 Halo Special Edition - £269.99 
• Xbox 360 Premium 3 Games Pack - £279.99 (Halo 3, Forza 2, Viva Pinata & Extra Controller)
• Xbox 360 Elite - £299.99

And with all these prices ranging from £190-£300, they still cannot sell more than the PS3 in Europe, when the basic 40Gb PS3 comes in around £279.99 - £299.99.  The best deal I can find is:

• 40Gb PS3 + Kyle & Lynch - £279.99

So I would suggest that Microsoft NEED to seriously reduce the price of all their models.  And I reckon a paultry $50 worth won't do it.  The 360 Arcade need to come down to under £150 (£149.99 should do).  The Premium should come in well below £200 and a 3 game pack with say Halo 3 and Forza 2 should be around £199.99.  The Elite is well over priced....yes it's got a 120Gb HDD, but no HD-DVD playback...so the Elite should be no more than £250 and should probably come with a few games for that.