Personally, I believe that Sony should reduce the price of the PS3 by $200 ASAP in order to give it the opportunity to come back later on in the console cycle.
I expect Sony to hold off on the price reduction assuming that its game releases for the rest of the year will give it the necessary boost it needs; compared to the XBox 360 and Wii the PS3 will sell poorly, and game sales will end up disapointing all third party developers. In 2008 as publishers start eliminating support for the PS3 Sony will attempt to reverse the negative momentium of the PS3 by reducing the price to $400; the price cut will give a massive immediate boost in sales, and the monthy sales will improve, but it will still be selling at a much lower rate to the Wii and XBox 360.
Sony's delay to introduce a price cut earlier will lose support from many developers, eliminate exclusive and multiplatform PS3 games, and will ensure the PS3 never sells well enough to even challenge the Wii.
