Well it seems Microsoft caught the stink first. They brought up the product, and introduced it to the public. Why 40 GB well chances are they found a good deal from a supplier. How many PCs in the coming years will have 40 GB drives. However I do not see them introducing this sku till next year.
Financially it would be a very bad move for Sony to release it during the holiday season. Since Microsoft knows its coming they probably already have a counter price cut on the shelf just in case Sony tries it. Sony really has no games that are going to push the console, and if Microsoft cuts prices again they will just reach more consumers that much faster.
There is a upside to a cheaper unit come next spring when budgets are far tighter then during the holidays. Still its a price war, and Microsoft was brilliant divulging the units existence to the public it has to have driven down sales.
However having four skus is rather disconcerting for any person betting on Sony. They would not be doing this if they were not feeling threatened and desperate. I keep expecting Microsoft to discontinue the core sometime after this holiday season is over.
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