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steven787 said:
Xbox will more likely die because MS is losing billions of dollars. Not that it will, but I am starting to believe this more and more. It's not about who wins the war, it's about making money. This is why MS focused on 07 at e3, if it doesn't sell significantly more into 08, than I think that likelyhood will increase even more.

MS is in this for the long haul. They don't give a shit about console gaming. They want to win the "universal home entertainment system" wars with Sony, and are willing to lose billions to do it. Sony's relative collapse with the PS3 is only encouraging them. They focused on 2007 because this is the last year in which there will be a great disparity between the 360 in terms of price and titles, and it is their last chance to put Sony in a permanant 3rd place this generation.

As for the original premise, Sony gets a temporary boost by its price cut, and MS is hurt because everyone is anticipating one for the 360. This will likely persist for a short time until the 360 cut is announced, or Sony exhausts the (relatively small) pool of people willing to spend $500 on the console.