Neither MS nor Sony is 'desperate' from a big picture perspective. Sony have had years of profits from this industry while MS have only recently made any.
Sure Sony short term won't like the massive whole from the PS3 taking off slowly but they are a very large company that just like MS knows its the longer game that matters.
Sony should be able to reduce cost of PS3 much faster than the underlying 360 cost would have reduced (they are a seasoned manufacturer after all, which MS obviously isn't) so I suspect they will continue to make room for price cuts if they deem them necessary.
I agree with most that overall MS is probably in no hurry. If they do price drop sooner it will be because they feel they need to tractically in Europe. But I think sales in US, coupled with just going profitable for a few quarters will deter them.
Whatever they say to analyts going profitable then immediately dropping price and perhaps impacting that profitability would be negatively percieved by industry analysts - and I doubt they want that. Also, I think they will settle for gaining lead with US hardcore and as much marketshare in Japan and Others as they can get. The numbers already show they cannot hope to be number 1 anywhere but US this gen (before folks flame that is what the numbers show - while Wii sales may fade, while 360 might fight back there is no proof of this in current trends).
Sony in fact might price drop frst assuming the indications of rapid cost reductions are true. A price drop in Others would likely give them a serious spike vs 360 and would also help in Japan. Also a price drop would get them more traction in US with gamers who would like both systems but don't want to drop the money for a PS3 just for a few exclusives.
Try to be reasonable... its easier than you think...
