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At a €400 price point, and still selling large amounts, the PS3 is still highly elastic. A price cut will result in a large increase in sales.

The 360 is not as elastic, as it's current price point is lower. It sales will increase if it recieves a pricecut, but probably not to the same scale as a PS3 pricecut.

I think MS need at least a $100 difference between the two consoles to remain copetitive, so although PS3 sales would surge following a $100 drop, there is enough of a price gap remaining for the 360 to still stay in the race.