The latest "gap" between the PS3 and the 360 is 3.23 million going by the latest shipment numbers through March. (67.2 million vs. 63.93 million) We'll have to wait until the next quarterly reports from Sony and MS are released to get an update on what the "gap" is. The fiscal quarter ends at the end of June, so we should have an update in July. You should take VGC numbers with a grain of salt.

Both consoles will have price drops before the WiiU launches.

Remember they are expanding that $99 down and $15 a month program. I think they will want to see how well that does.

And I do believe they will have a price drop closer to when the WiiU comes out. They saw how well it sold last year on Black Friday with (I think) a $99 Kinect and majors discount on the consoles.

honestly if you get a used xbox it only cost about $100 or so... we are talking old 360s here... a 60gb HDD is like $40 at gamestop also. how much lower do you want the console to go?

Early in a generation, install base matters greatly, and even small differences can be a big problem.

This late in a generation, though, there's more than enough install base available that the small differences just don't matter - the 360 isn't going to lose exclusives or support from multiplatform titles just because the PS3 managed to edge ahead.

So MS have to be more concerned with direct profit, rather than the indirect profit that can be made from growing the install base. Suppose that they make $75 per console sold right now. If they do a $50 price cut, then factoring in, say, $20 as the net profit per console due to game sales (many of the games bought will be second-hand, this late in the generation), MS would have to pretty much double their sales rate to break even.

What's more, if MS cuts the price of the 360, there's a good chance that Sony will react by cutting the price of the PS3.

I dont think that in a financial perspective, a price cut does not out weigh the potential profits loss from the imminent sales boost.

Problem is that Kaz wont do it as he aims to return Sony to profitability. Theres just no way. 

The thing is, with the Wii U coming and the 360 already noticeably cheaper than the PS3, Sony really doesn't have much choice if MS drops the price of the 360. Basically, Sony is in a rather tough position, because having the more expensive of the two consoles means that they can't afford to let the other console get a price cut without one of their own. In other words, Kaz's hand is pretty much forced, in such a situation.

Fortunately for Sony, the risks to MS aren't worth it, and so MS won't drop the price of the 360 at this particular point in time. The only way MS drops the price is if the Wii U dramatically pulls away sales of the 360 and PS3, in my opinion.

PS3 Slim uses 2 chips one for its GPU and the other for the CPU.
X360 Slim uses a more economical dual 45nM chip that has the CPU and GPU on the same chip.

Revised PS3 Slim will hopefully be a dual 45nM chip and make the PS3 Slim cheaper to mass produce and a good time for a end of year price cut.

X360 can either implement a price cut towards end of year or include Kinect or game bundles without dropping the price.

Both X360 and PS3 have exclusives and popular annual multi-platform titles Call of Duty, Madden and FIFA are known for assisting late year console sales.

8 months accounts for 40% of annual console sales. 4 months before Xmas accounts for 60% of annual console sales.

I don't know whether I want a new console right now. What is the problem with the current gen? Make games, make money. It does not mean you have to make money through hardware.