Why I believe Sony have to drop this price this year.

[misterd]

The problem with your logic is that you assume Sony can afford the price drop, and have been keeping the price artificially inflated.

First, even if they could drop it, there's question whether they would be able to drop it enough to get to an attractive price point ($199-299).

Second, we know from what Sony has said that they can't afford to do a cut this year, and their focus is on turning a profit. Not only can we expect the PS3 to take a hit, but I wouldn't be surprised to see them hit by slower sales in computers, HDtvs, and blu ray.

Now, it may not work out that way - sometimes entertainment does well in tough economic environments, but I don't think anyone, especially Sony, is counting on it. Therefore they have to be able to sustain the profitability on what they do sell, and that means keeping the price high on the consoles. ?They may be able to cut prices on hardware like TVs that are already profitable, but so long as they are losing money with PS3 sales, the price stays.