The PS3 was already available at $500 and no one bought that.  I think the set of people willing to pay $500 for a console and still need basic cables required to get it up and running (HDMI) plus a game is pretty close to the set of people willing to pay $600 and have to purchase all of that.

I will be purchasing either a 360 or a PS3 near the end of this year once the 360 goes to a .65nm process for the CPU cores and GPU core.  If the 360 is $400 and the PS3 is $300, I'd buy the 360.  If the PS3 is $200 and the 360 is still $400, I'd buy the PS3 possibly, depending on which exclusives come out by then.

Chances are, however, that the 360 will have all kinds of deals or in some other way be well under $400 by November. 

BigFatJ - there are deals on 360s already. Last year, at Christmas, many places, even then were offering X360s for $400 with a $100 gift card @ various retailers in the US.

>>Would you feel cheated if they drop the price by $100? by $200?Would you feel cheated if they drop the price by $100? by $200?

Yeah, but I don't want to have to buy another in 6, 12 or even 18 months because mine failed.  I've never bought a console that failed within 10 years of use before and the odds are a 360 purchased tomorrow will fail within two.  Microsoft is mum about failure rates -- they have something to hide, after all -- but many suspect it is in the 30% to 50% range after 12 months.

If the breeze on the Internet suggests that failure rates drop with the .65nm process migration, I'll grab me a 360 then.  Assuming, of course, that the PS3 hasn't gotten significantly cheaper than the 360 (the 360 has more games I want and is therefore more valuable to me).