When you make your predictions of end of 2009, realistically you need to predict the price that the console will be at that time as well. For example, 40M PS3 at the current prices, very unlikely. 40M PS3 with price drops of $150 across the board, very likely. Of course, then you have to ask if a $150 price drop in 17 months is likely? Possible, but not really likely.
So, how much will Sony be able to cut on prices? Definitely $50. Gritting their teeth, $100. At that price point, next Christmas, PS3 should be able to move a bit more due to buying it as a Blu-Ray player with a now not-too-expensive game machine "added in", makes more sense pricewise than it does this Christmas.
As far as catching up with X360, unless MS wants to start a price war, late 2009 for PS3 to pass X360 is reasonable. I think MS is happy enough with the money it is now making (compared to the Xbox). But you never know. If MS dropped their prices say $150 in the next 17 months and Sony didn't want to match that, PS3 sales would be hurting. But on the other hand, they would be causing large losses to income either.
Torturing the numbers. Hear them scream.
