Well, even with the PS4 they undercut Microsoft. But I maintain that I feel Sony wants a 400 dollar system to remain on the market while PS4 Pro drops from $399. I think we're seeing Sony wanting to branch out into more homes, and I don't think more expensive is how you do that. They've been down that route before. $399 is that sweet spot for Sony and one way or another I think they're going to hit it.
You can't say Microsoft didn't make it easy by selling a console with a mobile CPU and a low end Radeon 7700 GPU for $499. It was less of an undercut than the Xbox division basically knocking themselves out of the game. After all, Sony themselves had aimed for budget hardware with the PS4.