If Sony pulls the trigger on $299/299EUR, it's all over - Nintendo and Sony romp for the rest of this generation, while Microsoft struggles on as distant third. That price point, adjusted for the rate of inflation, is what $199 was for the PS2/Gamecube/Xbox generation - the point where the mass market buys in. Price cuts aren't linear in their effects, they're more like an exponential curve - for example, sales at $500 per console might be 100K/month, sales at $400 are 200K/month and sales at $300 can go as high as 400K/month.
None of which means that people shouldn't be buying and playing any particular console. They are all wonderful machines, with insanely fun games. It's just that Microsoft's billions have not bought the capacity to be a full-fledged hardware producer.
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