Now lets imagine the doomsday scenerio of the sub $399 ps3
Had sony made a $399 ps3 with move, it could very well have been ever so slightly more powerful than the nintendo wii. There is no way it would have been near the performance of the 360 considering how the $600 ps3 isn't much more powerful than the 360 and this one is not only $200 cheaper but comes with a move bundle. It wouldn't have attracted any of the "nonegamers" that the wii did because the library would have been fairly empty of quality family titles. Crash and Spyro all but died in the ps2 era.
Meanwhile all the alienated core gamers would have flocked the the xbox despite the RROD fiasco because it was the only console that stuck to traditional controls, especially considering its early game library was much better than the ps3's (back then when titles like bioshock, oblivion, mass effect, dead rising, lost planet, etc. were exclusive) Those games and their sequels would end up never getting ported to the ps3 which has a different control scheme and isn't as powerful. Alot of the shockingly good ps3 exclusives would have ended up being lame, because the main sticking point to most of them is the incredible graphics and cinematics which they would no longer have.
So in conclusion. PS3 sales would have started off slightly better due to the cheap price, but never picked up steam like the ps3 currently did because the system wouldn't do casual better than the wii nor core better than the 360. It ends up selling much less than the current ps3 will. Games in general also suffer massively as the only competent developers of motion controlled games has proven to be nintendo and sony. Almost all third party games end up sucking for both those systems and the 360 ends up getting fewer third party games as well because developers can't just port them to the ps3 causing most current classics to end up being unprofitable. Console sales began declining much sooner, and next gen would have started 2 years ago had the ps3 launched at sub $399.