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With multiple SKUs of the PS3, its possible that a ~$70 cut could happen on the low-end SKU ($329.99), and a $100 cut on the high-end ($399.99). Its been stated before that the only difference between the 80GB and 160GB models is the HDD, and the cost-to-make difference for those amounts to a whopping $3 USD.

Its in Sony's best interest (just like MS) to sell the more expensive SKUs.  

MS is not going to cut the price on the Arcade next year.  And... I'm gonna call it -- Elite model is gone for good after the holidays.  MS might cut the price of the Pro SKU by a small amount, next holiday season.