What could MS do to counter the PS3 price cut?

[montrealsoon]

I think sometimes people still believe there is actually a plausible, winnable war betwen MS and SONY. There isn't. Nintendo is in the strongest position in the industry and is extracting "Nintendo style" profits, now based on much higher sales.

SONY (and MS) have to look at "the GameCube approach" now and sustain themselves profitably until the next initiative (next gen). Let's face it, due to decisions made years ago, SONY had to either bleed money, or entirely fall in market position. The business reality now is that HD games cost a lot of money to make, and the potential market (owners of either HD system) is looking to be lower than required to be profitable. Most companies have moved to support both in order be profitable.

So, Fall 2008, if SONY lowered their prices (and lost another TON of money), they would not have affected Nintendo's sales (a lower priced 360 hasn't affected Nintendo), and would not likely have secured more 3rd party exclusives (Microsoft hasn't with their "higher than PS3" sales.) Ultimately, PS3 owners are just as good off, SONY is better off for 2008 with lower sales. You can say the same for MS, except a better positioned design decision (HD-less model) allows them a lower priced entry. Good for MS, good for 360 owners.

For 2009 and a scenario where a lower priced PS3 outsells the 360? I suspect MS will take a similar "more profitable route", as just selling more consoles than SONY for second place is only a concern of fanboys.