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I could see it happening. Sony seems to care more about units sold than profits. They aggressively dropped the price of the PS2 when they were Dominating the market. They did it mainly to expand DVD into people's homes. I don't see why they won't get aggressive with the price cuts again. Espescially considering they are in last place and want to expand TWO forms of media: 3D and BLU Ray.

I personally hope both MS and Sony drastically cut their prices. That would help out many of the smaller games that will most likely get overshadowed this holiday: Dark Souls, Deus Ex, Twisted Metal, etc.