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@skeeuk
I agree that the 360 price cuts this fall turned things around for MS. But then, so did the price cuts last year for the PS3.

The Blu-ray drive and expensive architecture of the PS3 is what's holding the PS3 back, not some act of desperation by MS.

Eventually, the PS3's component costs will drop enough for Sony to cut the price again, but considering the architecture they chose, it might never be as cheap as the 360 can go. It was a tradeoff... put in more expensive drive and processor and charge more but have the potential to do more, or put in cheaper components and charge less but lose differential between your product and the competition...