Analyst: Microsoft Could Use Price as a Weapon

[Bodhesatva]

You're missing the point, Alby Wolf: I don't believe anyone is arguing that the 360 is the only console that benefits from cost reductions or software sales. They all will, eventually.

But for Microsoft, those cost reductions are already here. They are already making a profit on the hardware itself, and thus can afford to drop the price without dipping significantly into losses. For Sony, profitability has not yet been achieved on hardware (last estimate given was at the end of FY 08, ending March 31. Sony estimated ~130 dollars lost per console produced).

When Sony achieves profitability -- and they will, because, as you said, all consoles see cost reductions -- then they will be ready to discuss price cuts. But they are not there yet. Microsoft is. So at this exact moment in time, Microsoft can afford to cut prices, while Sony cannot.