The price cut should mean that PS5 will at least sell more than Switch 1 during next year, but i would temper expectations somewhat, PS5 is entering its sixth year on the market in 2026, so sales will not skyrocket to like 50k weekly. If they can reguarly sell 20k-30K they would probably be content with it.
I think the price cut is mostly to try to take PS ecosystem into a better position in Japan in time for the PS6, they probably don't want to go 2 years with regular 7k weekly sales until they launch a new console there, such low weekly sales for longer periods of time isn't good for revenue, profits or mindshare in any market.
But Sony and Nintendo competition in Japan will heat up, with both companies probably going to moneyhat games to skip releases on the other system. Sony knows that even with a handheld, Nintendo has games such as Pokemon on their handheld that is massive in Japan and won't run on PS6, which is a huge advantage for Nintendo in that market, which means Sony will probably try to secure big third party exclusivity for games such as DQ, MH etc, while Nintendo will probably try to counter act such moves from Sony.
