IMO, I think Sony will drop the PS3 to $249 in 2011 and $199 in 2012.
I don't know, It'll be close.
What makes you think that?
Sony only just recently started making a few dollars profit on each PS3 sold. Why would they want go back to losing money on each PS3 sold just to outsell the competition? They are making a profit for the first time since the PS3 was relreased so they have a lot of unprofitable time to make up for. Maybe, and this is a big mayby, by 2012 the PS3 will be cheap enough to manufacture that Sony can sell it for $249 USD. But they won't be at that next year or at $199 the year after that. I doubt they can knock a $100 USD of of production costs in just two years without a major redesign and that's not going to happen. They might reduce the internal parts a little, but we aren't going to get a PS3 Slim Mark II, that I can assure you.
They made a profit on the $299 PS3 back in APR 2010 . I think they can afford to break even on a $249 PS3 by Fall 2011. That gives them about 18 months to cut their prices by $50. I don't know the specifics of the costs of hardware, but I think they can make that cut. Besides, I can't see the PS3 entering 2012 at $299.
Sony never said they were making $50 on each PS3. For all we know they're only just barely making more than breaking even now. April wasn't that long ago and I doubt there's another $100 of easily reducable manufactuing costs they can cut. As for you saying Sony can afford to break even, I don't think they want to. For the first 3-4 years of the PS3's life it lost them money hand over fist. After a few months of a little profit I just don't seem them willingly going back in the red. It's not like Sony cares about bragging rights and is willing to undercut MS to steal their way to 2nd place. As a business it's all about profit, right now they are profitable. Why risk losing profit when they are selling fine right now.
Maybe in a year, if the market forces their hand, they'll drop their price by a little. I don't see them dropping more than $50 unless MS goes lower or if Kinect really takes off. I agree that it's unlikely Sony will keep their price at $299 going into 2012, but I think $249 is much more realistic than $199. However I don't think it's going to matter becuase MS will drop their Arcade far below what ever Sony drops to while matching their price with the Elite. Nintendo would be forced to drop as well which would be super cheap. Sony knows any price drop they do will only cause them to lose money on each sale while doing nothing to outsell their competitors.
I just don't think people are sitting around waiting for Sony to drop to $199. People are doing what people always do. They are waiting for the killer game that forces them to buy the machine it's on. Some of those games are on PS3 and others are on Xbox 360 and Wii. The difference of $50 isn't holding PS3 sales back.