True it wasn't a "price drop" as much as value increase but that means different things to different people. To people like us who understand what is going on, what the previous values were, what the new values are it is indeed a price cut.
Sony's problem is that "real gamer" fantasies aside, the vast majority of consoles are sold to people who do not understand the differences in value. Most of these people will go into a store, see 80GB $600/60GB $500 and it will look exactly the same as 60GB $600/20GB $500. The reason is simple, $600/$500 is the only difference most people understand. To them the PS3 you want to buy is still $600, nothing has changed.
Sony would probably have been better off slashing the 60GB to $400 to clear out inventory and selling the 80GB at $500. That would require a major profit hit though, apparently too big of one.
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