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People do realise that there is a diminishing effect with price cuts, don't they?

Please realise that a drop from £200 to £150 has a much greater effect than the drop from £150 to £100. There is a reason as to why the PS2 is still £100.

Even if Microsoft does match Sony in price cuts (which I significantly doubt), the effect in demand for the Xbox 360 will not be as great as the effect for the PS3.