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I've been guessing that they'll wait too see how Halo 3 and GTA 4 affect sales before cutting price. I don't think the PS3's price cut is going to change anything, as the price is still ridiculously high. The cheaper 60GB version is the same price as the original 20GB one anyway, and that didn't sell all that well.

Of course if a miracle does happen and PS3 sales increase for more than a few weeks, then MS might get scared and drop price. Still well within the realm of possibility.