$500 is too expensive. If PS5 releases at that price (or higher), then it is going to get spanked again. With Google coming in and Switch already selling well, the competition looks even tougher this time around than it did in generation 7. And...I hate to say this...but we are kind of due for a recession. The business cycle is called a "cycle" for a reason. I hope it is not a big one like the 2008 one, but it could be.
There are lots of factors against a $500 console.
I agree. There needs to be a base SKU at $399. Google will be selling something for a whole lot less that will, presumably, play current gen games. Ninty will be selling something at probably $250, or maybe even $200. Since MS is reportedly going with two machines, I'm sure at least one of them will be under $400, maybe as low as $299. So, if Sony, or anyone else, tries to go with the cheapest point of entry into their new generation being $500, they're likely gonna regret it.
Of course, companies should have already learned this by now. But, for some reason, they keep trying. So, I have little faith in Sony to be smart about pricing. I have little faith in MS as well, but am less worried about them since they seem to intend on having 2 SKUs.