Early in a generation, install base matters greatly, and even small differences can be a big problem.
This late in a generation, though, there's more than enough install base available that the small differences just don't matter - the 360 isn't going to lose exclusives or support from multiplatform titles just because the PS3 managed to edge ahead.
So MS have to be more concerned with direct profit, rather than the indirect profit that can be made from growing the install base. Suppose that they make $75 per console sold right now. If they do a $50 price cut, then factoring in, say, $20 as the net profit per console due to game sales (many of the games bought will be second-hand, this late in the generation), MS would have to pretty much double their sales rate to break even.
What's more, if MS cuts the price of the 360, there's a good chance that Sony will react by cutting the price of the PS3.
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