I honestly doubt this model would come to fruition. Sony has two financial concerns the first is that each console they sell is profitable. The second is that they cover the astronomical debt they have incurred. They need to catch their breath and make some money. Otherwise you are not going to see PS4. The rotting global economy isn't going to be doing Sony any favors. High end electronics and entertainment are especially susceptible to economic woes.

Microsoft is actually in a more tenable position to reduce their MSRP. They have been in production longer. They have retained their original price point longer. They have generated greater licensing revenue. The result is that they can effectively dig deeper then Sony at the point. Sony realistically needs another year to reach the cost production advantages that Microsoft is enjoying right now.

You have to be realistic Sony wants to make money rather then get involved in a protracted price war. Microsoft wants to make money rather then get involved in a protracted price war. Neither company wants to put themselves that far out of position against Nintendo financially.

Sony did two massive price drops last year not out of a sense of competition they did so to save their struggling console from oblivion. That was most definitely not their plan. They took a more massive loss doing that remember that MSRP drop actually increased the losses off the original production runs that were produced at a much larger cost. These rapid price reductions are not the norm. They are extreme exceptions. We shouldn't be thinking they will be common place.

Nobody wants the war. However it is hard to imagine Microsoft being as vested as it is not retaliating in the extreme. Were Sony to go at the three hundred dollar point be the end of this year. Microsoft would go to two hundred or less. All Sony would accomplish is to push the 360 into the low end market where the majority of console sales are made. That is where non core gamers start to invest in hardware in a big way. Microsoft would not only increase their sales from that price, but they would drain off sales from the PS2.

You probably shouldn't hold your breath waiting for massive price cuts. I expect Microsoft will get around to a fifty dollar cut in North America some time in the coming months, but that will probably be it for the cuts this year. That would place Sony and Microsoft at parity for the cuts.

 Because he is who he is?

I expect the PS3 to gain the most out of the cut, and would outsell the wii at that.

Restoring features to the PS3 won't be as effective as a price cut , period.

Wii doesn't need a price cut this year .

Looking back at price cut its plain as day to see PS3 would gain the most, it always has.

Why not just be totally fair in fanboy fashion, and put the Wii at $299, the Xbox 360 at $299 and the PS3 at $299. If you're going to skew prices in your favor, you might as well go all the way. If the Wii can get negative sales, price increases seem likely as well.

I don't get it , one of the Wii's biggest selling points is it's selling price , it's the reason it's 5 million units ahead of the 360.

That would quickly turn Demand>Supply to Demand = Supply or Demand

Honestly, if you think that there are a lot of people thinking "Oh man, I desperately want an XBox 360/PS3 but I'll buy a Wii because I can afford one" you're fairly delusional. People who are buying Wii Systems (believe it or not) actually decided that they wanted a Wii.

I agree with you completly , I think 99.9% of people won't choose a Wii over 360/PS3 because of price point , I wasn't really trying to compare with 360 sales I was just trying to illustrate how much th Wii owes it's succESSto it's low price point.

Casual devices /games are more price elastic than Hardcore hardware/games (not to say that the Wii is competley casual but it identifies more with the casual gamer audience than the hardcore) , to put it simply the Wii is far more responsive to price changes than the 360/Wii.

A PS3 price cut would bring the most. Then a Wii price cut, but they can't really reduce by much considering they still want to profit per console. Then 360 (at least looking in Europe because its less than the Wii but still getting outsold by the PS3 and Wii).
If Sony did a price cut of 100$ plus release Littlebig Planet along with it, that would definatly show the ps3 as both a hardcore, core, and casual console all in one....well maybe. That's still a long shot