MS would have to immediately drop the high end 360 to the same price or be crushed.
Nintendo would ignore it and since PS3 has the least mass market games of the 3 systems currently, would get away with doing so for a while. If your a woman or have kids there's just too little content on PS3 to be worth a purchase even at $150.
Assuming MS drops the price of 360 then we go right back to where we are, except 360 would be stealing more of Wii's audience than PS3 and therefore probably outsell the PS3 until Nintendo matched the price point. On the flip side, a lot of people might buy a PS3 just for blu-ray but that would only serve to make this a huge loss for Sony even if it ups there marketshare.
There's little to be gained for Sony to be at a mass market price until they have the corresponding software. When Just Dance, The Biggest Loser and Deal or No Deal have PS3 versions then dropping the price below's Wiis might make sense.
Remember the PS2 sold as much as it did because it had ALL the software for ALL markets not just games for gamers.
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