Cutting now would be too late for this Xmas season, better carefully time the cut.
But this ain't much news, each console, bar Nintendo ones that almost always sell at a profit since the beginning, have this dilemma at least once, XBox360 itself struggled 9 months before doing the right move, and before the awfully expensive PS3 was released, XB360 was the most expensive console commercially available.
Only Wii and DS look immune now.
Edit: @kars:
Including BD and HDD is making them suffer now, but it will pay after, bD already paid something back helping the format win the war, HDD may pay gradually allowing every user, even those buying entry level models, to buy downloadable contents. BD drives and HDD prices drop quite fast too, so as time goes by, they become more and more an appealing plus with a lower cost.
