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It's a measure of just how clueless Microsoft's top management is that they don't seem to care that they're getting absolutely annihilated in Europe/others. This matters, because this is the true growth pole for console sales. Eastern Europe, Russia, Latin America, urban China are going to get filthy rich over the next ten years, and these consumers will be more inclined to pick up a Wii (affordable now, great games, reliable machine) or a PS3 (quality BluRay player, great games, reliable machine) than a 360.

Price drops won't help at this point. Sony has cost-reduced the PS3 to the point where they could easily match any decreases.