Landguy, the PS4 price cut doesn't have so much to do with competing with others as it has to do with broadening their reach. They should be within range to hit $299 this year, and that opens the door to the mass market buyers. $400 or even 350 is too much for most families for an initial console investment, but 300 amd under puts it in the impulse territory for many millions of additional buyers. And the business is classic razors and blades, as long as they aren't loss leading the console itself, they know the real profits come from software, accessories, and PSN.
Loose example here, but say dropping to 299 nets them 4 million more console sales during one year, and the average buyer purchases two games, $50 worth of accessories, and every other buyer opts for PS+. They win big time compared to sticking with 399 and not having that reach. There is also a networking effect as those 4m customers make it more likely to have uptake with their friends and family buying into ps4.
So even if only Sony made consoles and Nintendo and MS were out or software only, they would have every reason to drop the entry price as possible along tiers. I feel the $399 market for consoles is going to be extinguished this generation very soon. There simply aren't infinite consumers willing to pay that much. In every previous gen the bulk of the sales occur at 299 and under by a pretty big margin, and the upside is that once someone has the console, selling them a $60 game or various DD deals is much much easier than swallowing that big initial cost.
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