Microsoft hints at a $199 Core system

[Dolla Dolla]

It is my belief that Microsoft only needs to do a couple things:

1) Increase the reliability of their console.
- The game offering is there. They have the widest selection of all the next-gen consoles, but there are worries about hardware failures and the like. This fall the 360 should see a price drop when they move to 65nm technology, which should also increase reliability and give a better customer image.

2) Compete with Nintendo
-  I can't stress this enough. Microsoft shouldn't worry about Sony and what they are doing. If Microsoft focuses on combatting the Wii, they will have to be more aggressive. There is over a 6 million console gap between Microsoft and Sony. That gap has been pretty consistent since the PS3 launched. The Wii has closed that gap to less than 2 million. If Microsoft focuses on Nintendo, they could essentially make Sony damn near a non-entity.

If that price drop comes around Halo 3/GTAIV ... I think Sony will cede another holiday to its competitors, and this is potentially the most crucial holiday period for the PS3. They can't survive another spring/summer with numbers like these.