Remember that $50 a console on 60k units a week is $3 million dollars a week in price cuts. And way more than that at peak time (holiday). They need to move a lot of consoles on this cut and pair that with Live/games/accessories/downloads to make that money back. If they would've moved 3.5 million consoles in North America the rest of the year without a cut, that's $175 million to recoup in terms of increased sales of merchandise/services.
$50 is a signifcant cut in terms of the bottom line.