Sony has been undermining the PS3 pretty much from the start. So it isn't anything new that they would continue the process.

Another thing that is undermining them to some degree is the constant PS3 price drop rumors. Who would want to take a chance on a new PS3 if you think you will turn right around and loose $100 bucks within a few weeks? Thats how some people feel at least.

If someone has a $300-$500 budget on video games for the year because of hard economic times what benefit would it do to drop the price of the PS3? So they can lose money on the sale of a console then get almost none of it back with the sale of 2-4 games?

With that same budget Sony could sell them a PS2 and 10-15 games and make a bunch of money. There may be no Licensing fee, but there is a good chance a bunch of those games sold on the PS2 will be Sony published games bringing in revenue.

There is no point for Sony to try to attract low budget consumers with the PS3 right now. It makes no sense to drop the price of a PS3.

naw... cutting the ps3 price would create a bigger demand than what this ps2 drop would cost meaning more sales at less cost equals higher losses

I guess its the curse of having a successful last generation console. I am not sure why you would think a PS2 price cut would undermine the PS3. I think it is an excellent strategy. They have a low end and high end option for someone looking to join the Playstation family.

What about the low budget customers that pick up a 360 in ever increasing numbers?

It surely has to be a high risk strategy looking at that scenario as they would be the customers that are lost forever this gen.

I was looking at the signal it sends out to there userbase really.

Yes, Sony is deliberately undermining the PS3....sheesh

Seriously, this is where we are at????

Anytime you have more than one console on the market and they directly compete with each other, what else would you call it other than undermining?  Foolish?  Idiotic?   I don't think the PS2 is in direct competition with the PS3 now but it was when the PS3 first come out.  And I do believe they should have axed it all together, just like M$ did the original xbox.

Sure it is risky, but it is the best they can do. A price cut on the PS-3 would mean that they sell at a loss. They don't have this kind of money at the moment. While everyone who buys a PS-2 now won't buy a Xbox 360 in the next month, instead they pay money that Sony earns. This is the important factor.

The company demands that their gaming division earns money again. If they don't achieve this goal there will be a very strong frorce for severe cost cutting in the gaming division. The company needfs money now, not some unclear hope for better times in the next few years.