They can and it would work as long as it's gaming focused again.
If XB drops last gen and delivers a $300 console that's worth $300, PS can drop the price to $400 if they feel they are losing sales. I don't see this happening unless we're talking 2021, because XB1X owners won't be impressed enough by a $300 'XB2' in 2019/2020.
If XB sells a $400 console for $400, PS5 should still be fine being more capable to match it's price. PS can always drop the price to $450 or $400, but most likely XB would follow suit as well so $100 gap remains.
If XB sells a $500 console for $500, PS5 will be just fine. Why jump from PS to XB if both consoles are practically the same? If XB sells it for $400, PS will most likely follow suit, or won't be far off.
If XB sells a $600 console for $600, PS5 will be just fine. If XB sells it for $500, then PS5 will have to drop to $450 or $400.
I still think a base PS5 and PS5 Pro at launch is the best idea. Have the base at $350-$400 and the Pro at $500-$600. Make sure both consoles have the hardware to back up the price. The base gets you 50% 4k/60 and 50% checkerboarding, and Pro gets you 95% native 4k/60 and 5% checkerboarding. This way if XB only launches just one console around the same time, they would be in trouble no matter what price bracket it fits in.
If XB launches two models as well, it shouldn't change the sales stats from this gen much (mostly NA).
If XB sells a base and an X version at launch, for around $375 and $550, and there is only one PS5 for $500, it will leave PS in a bad spot because if they try to drop the price to compete with both, then XB is in control to drop the base, the X, or both. This is the only scenario where I see PS having a tough time next gen because a $500 PS5 probably means no Pro model coming, or a longer wait than three years.
