IMO it was much needed, once the PS3 overtakes the 360 install base Microsoft has very limited PR options left to persuade investors (and loudmouth fanboys spreading the gospel) the 360 is a wild success. The longer they can prolong this head start situation the better for their PR considering the Wii at similar entry pricing totally crushed 360 sales already. They have to significantly overtake XBox worldwide sales to demonstrate growth.
This price cut (despite hardware failure costs), the year or more head start, the premature death of the original XBox and the early release of major XBox sequels IMO all fit this strategy.
Taking equal time frames the PS3 sold 14.41 million units and the 360 11.60 million, this trend seems to have continued for the latest fiscal quarter. This all despite the PS3's higher entry pricing and most major anticipated titles yet to come.
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