What could MS do to counter the PS3 price cut?

[amirnetz]

Sony stated clearly that their competitive approach is to sell on value rather than price. That had been their strategy from day one and the keep repeating it frequently. I expect Sony to find ways to increase the value of the PS3 instrad of cutting its price.

But lets assume Sony will at some point cut the price. Indeed what would Microsoft do?

If Sony cuts the price by $50 to $350, Microsoft is still sitting pretty nicely with the Arcade. The target audiance for the Arcade is not the one that would consider the $350 PS3.

One the Elite and Pro models there will be a price pressure. Microsoft will have to yield on price there. My guess - Increase the Elite HD capacity to 250GB and sell it for $350. The Pro will get the $120GB drive and will sell for $280. Adding more disk capacilty is a very cheap way for Microsoft to differentiate itself from Sony without increasing its marginal cost considerably.

A new slim design will wrap the year for Microsoft and will allow it to increase its 2008 holidays momentum through 2009.