I think last generation showed that price wars in consoles do nothing positive for consoles. You can force your competition to lower price, and thereby hurt them, but price wars are rather predictable with very few options for movement.
Why is that?
Price is one of the most important elements for a video game console. Too cheap, and the machine seems lower quality. Too expensive, and, well, people won't pay. Pricing is a rather streamlined process that any marketer should be fluent in. Price affects perception, which is the most important thing for a console.
So what if you could drop a console's price without that drop in perception?
I ran into a guy a couple weeks ago at a shawarma stand who wouldn't stop talking about his iPod. He kept going on about how he got it for 700 Shekel, which is roughly $175. See, in Israel, electronics prices aren't standard, and you can find three different shops in the same mall selling the same product at three different price points. People choose which price point to percieve the product at, based on their personal experience, and generally choose the cheaper of the three. Some people will choose to be lazy and pick up one of the more expensive ones just because they value their time more than their money, but the people who think they're getting a deal will talk about it, and you've got some decent viral marketing.
So what if you had the best of both worlds? This mostly affects the PS3, since they seemingly chose the worst price point of the three, but what if you could influence certain stores to have "sales" on non-traditional days. The $600 tag is still on the shelf, and people are forced to percieve the device at this price point, but the consumer gets to go home and brag about how he got the thing for $475. He'll convince other people to go out looking for the product, and some of them might even buy it at the $600 price point because of the guy that bought it at $475.
Give different retailers incentives to price the console differently, but keep the original MSRP viewable... everyone loves a sale. And you never really dropped your price, did you?
