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The funny thing right now is Sony caused a massive problem for both themselves and Microsoft when they cut the price way too early in the PS3's lifespan. By using such a huge pricecut at the an early stage they've had to revise their entire business model I'm sure and that is why they've not been able to respond to the Microsoft price cut as swiftly as they would have liked.

What will be interesting is if Microsoft want to respond to any price cut as they're strategy probably would have ideally left them waiting till next year to price cut. The 2 HD rivals are completely offset now which is why the momentum swings with cuts have been so huge this generation between the two.

Full credit to Sony if they can reduce the costs far enough this year to make a cut possible though, they've done a fantastic job shedding costs since launch.