Can MS survive on the basis of killing competition...
They think of it like a fight, come out swinging try to win it in the first couple of rounds then dominate, abuse, and prohibit competition. It worked for Sony, but it was almost unintentional with Sony, they weren't selling PS1 at a loss. It worked when MS did it in a lot of other fields.
What is impressive is how quickly they changed models when they realized that they weren't going to dominate. These are very big companies (all three), they can't just stop on a dime and change direction that easy. People expected (the real) 360 to be $299 by now, but deciding to keep the price high they were able to turn a profit. Honestly, I still don't think a price cut is necessary.
They are selling hundreds of thousands of consoles a week, why lower the price?
Christmas is coming, 50 bucks isn't going to drive a long term increase, I don't really get why they would... I still don't believe that the 360 is dropping Sept 7. There's no reason to. They have no control over whether the PS3 is going to pass them or not in the long term- and it doesn't matter. Companies LIKE making games for the 360, it's got a high attach rate and looks to continue that and it is easy to port from PC or PS3.
But even if it does drop, I would think they must no more about the holiday market conditions. Maybe, the execs are under pressure to beat PS3 from MS home office or the board... a 200/300 360 guarantees that PS3 will not pass 360 this year. Maybe they really cut costs so much, have recouped initial development, or eliminated some other cost - like not having to fund Too Human anymore :P
Neither console needs a price cut. They really need to push this generation longer so that higher development, higher performance demands, and longer dev cycles can catch up to the current situation. They need to hold off so that people feel like it's time for the next gen - so they are eager for the next console.
I would cite regulation, but I know you will simply ignore it.
