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dallas said:
Why not just throw out the universal assumptions of supply and demand?

I think, in a general sense, his question has some merit ...

If you assume a price reduction of $100 for the PS3 and XBox 360 priemium, $80 for the XBox 360 Elite, and $50 for the XBox 360 core and Wii you end up with the following prices:

Wii $200
XBox 360 - Core $250
XBox 360 - Priemium $300
XBox 360 - Elite $400
PS3 - $500

The number of potential customers who are willing to spend $500 on a PS3 but not $600 is (probably) pretty small so the PS3 may not get as big of a sales boost from a price drop as their competition.