Okay reading thorough all the post I don't understand why people think the XB360 price cut was to squarely attack Sony sales. Microsoft now has a new target, and they set their sights squarely on the Wii. They priced the arcade not to cut into Sony sales more, but to try and slow the Wii's progress...as some have forgotten the Wii was the leader for the most part in software/hardware sales in 2008.
...Look at the bundled offerings that Microsoft has with the Arcade, as well as Pro. They realized...late, but there IS a cap on how much you can sale to the Hardcore market. The NXE isn't to combat Playstation@Home, it's to make it more accessible an interface like the Wii to non core gamers.
Sony has to improve themselves as a company first. This focus WILL cause things to lapse. The poor QC on LBP is an example.
Do you think Nintendo would let something like that slip and cause a delay to an important title like that?
The Interweb is about overreaction, this is what makes it great!
...Imagine how boring the interweb would be if everyone thought logically?
