The price drop by MS has been a stroke of luck. They couldnt have done it at a better time. With the economic crisis it makes it so much more appealing to consumers. The problem is that they dont have enough cheap models to meet demand, at least not where I live. Im a big gamer fan and all the shops I frequent in Tokyo are sold out of the 20,000 yen ($200) model. I dont think they anticipated the effect the crisis would have.
As for Sony this crisis screws them. Not just in the gaming department but across the board. The yen is stronger against foreign currencies and it kills their profits in overseas markets. Cheaper Korean electronic companies (Samsung, LG)) have been cutting in to their sales for years and this only complicates things.
As for the PS3 they are already selling at a loss and the crisis has put them at a further loss. To drop down the PS3 price even more could really hurt them financially, taking away money they could put in to R&D to create a more cost efficient model. However, if they stand their ground on the current price they could lose ground in Europe to MS.
MS has put them in a tough position. However, I dont see it at as a calculated move on their part. A price drop was due considering they are coming up on their third holiday season on the market.
If the rumors are true and MS comes out with a mini Xbox 360, it could really help offset the sales for an eventual price drop from the PS3. A streamlined Xbox360 would do very well, especially if bundled with a killer app that has been out on the market sometime.
Meanwhile the Wii is appealing to a wider range of gamers, several of which will move on to the maturer titles on Xbox360 and PS3. This helps the overall market in the long run. I think there will always be room for both. However, I see it as very difficult for Sony to overtake MS, especially with Wii in the mix.
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