Price cuts, and to a certain extent market share, do not matter to companies.
What matters is profit, and neither Sony nor Microsoft are making money and as they resort to price cuts to maintain sales they'll lose money.
Compare and contrast Nintendo. Nintendo lowers prices only when they can afford it and always makes a large margin on software and hardware and so has always made money.
What I find a joke is that Sony lost money when they had PS2 (most popular home console ever) out against no serious competition. What happens when PS2 and PSP sales fall? Where will the money come from?
Microsoft... well $7,000,000,000 is a lot of money to lose on a loss leader strategy.
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