Well, there is a certain point where Sony can't drop the price any further.
The problem is here, the PS3 and X360 are almost feature-equivalent. So people who simply wanted a "next-gen" system already have a X360. Microsoft's going to pimp that lead until they annouce the XBox 3 or whatever they call it.
Take a look at the Gamecube. Feature similar to the PS2 and XBox, but much less expensive. The PS2 had a year head start and used that time to maintain its massive game library. When Nintendo made a AAA game for the Gamecube, Sony had a few AAs and a dozen Bs. Even when the Gamecube dropped its price waaay below the others, nothing happened to sales. The PS2 library was too large at that point.
Fast forward to now. A mere price cut isn't going to save the PS3, even if they went below the Premium's price. The X360 can simply publish more games than the PS3 can. Basically Sony needs a constant stream of AAA titles to make up for the 360's quantity. And because the systems are too similar, there is no feature to encourage great, unique games on the PS3.
*Super meter empties*
Uhoh.
There is no such thing as a console war. This is the first step to game design.
