I dont think price generates demand for a console all on its own. It does make it more of a impulse buy for some, but the consumers that buy the type of games that the Xbox360 offers would have bought the Pro at $299. That didn't happen, so I think many people either own/are getting a Wii, or are still loyal to the Sony brand.
Also, the PS3 is going to be pulling massive numbers this holiday season regardless of what the Xbox360 does. Since the PS3, and Wii are still going to be pulling huge numbers, any advantage the 360 has will be offset by its disadvantage in others and Japan.
The 360 may or may not be a hit at $199 in NA, but I don't think it stands a chance of winning WW this holiday season IMO. We will see however, but supply is also a big issue for Microsoft. They won't have an infinite supply of Arcades, and they will have to ship and maintain the Pro and Elite. If its a hit, demand may very well outstrip the supply for a good while.
Also, if the 360 does begin pulling away, the PS3 can (and probably would) drop its price.
