Why would MS eliminate the Arcade, especially if it gets their low price point below $200?

I also doubt we'll see $100 price drop on the PS3 again this year. That would be a huge drop for Sony in only 24 months on a console they were losing a boatload of money on at launch.

It would also mean that Sony has dropped the price of the PS3 by $200 in 24 months while MS has only dropped the price of the 360 by $140 in 36 months... Unless Sony wants to keep losing money faster than a member of Gamblers Anonymous in Las Vegas, they will have to slow with the price drops sooner or later.

50$ for premiuim, or 299$.
i don`t see it making 249$. If it will, then Sony WILL reply with ps3 pricecut.
I guess, it would be best to make pricecut before GTA4 release, to draw more fans on x360 with appealing CHEAPER price.
How this will work against Sony BRAND, we will see, but definetely better with price cut.

The price cut will appeal only to casuals. Most people would buy ps3 for FFXIII or MGS4 or KZ2 or other BIG ps3 game NO matter console cost 299$ or 399$.

Right before GTA4, expect a $50 price drop. Except for the Arcade, which will be at $250.

The Core and Elite are fighting the PS3 right now. MS should do what it needs to steal any GTA4 fans from the PS3. Having the entry model be a $100 below the PS3's entry model will make the choice obvious. Add the exclusive content on top and you will seal the deal.

The Arcade isn't going to drop under the Wii's price. No point really. Either consumers know there's only one console to play WiiSports on or they'll just grab whichever console is on the shelves. Which will be the Arcade, since the Wii is always supply constrained.

I see it happening. The PS3 was released with very high-end and newly developed technology (The BR player and the CELL). It also released with PS2 hardware that has now been removed.

The speed that the components will drop in cost is a lot greater than the 360.

It’s like the new Mac Book Air with the SSD drive. Today you pay $1000 just for the HD. In two years, that same drive will probably cost 40 bucks.

I see it dropping $100 this year.

Not true. While Moore's law doesn't apply to price, most tech products follow a very similar scale, dropping in half every 18-24 months until they reach rock bottom pricing.

Prices don't drop that quickly and while the PS3 will be two years old this holiday season, it's unlikely that Sony has dropped much more than 50% off the manufacturing cost during that time. Considering that the machine reportedly cost $800 or so to make at launch, that puts it in the $350-400 range.

Don't forget that sooner or later, Sony will want to start making money on the console, too.

And BTW, if that SSD is $40 in 2 years, I will eat my hat. And a whole crow. No. Way. In. Hell. Memory prices are dropping but not that quickly. It will be a few years before we see reasonably priced SSD drives. Even middle-of-the-road HDDs (around 160GB) cost more than $40. Laptop drives are even more money, and mini-drives like the one used in the Macbook Air are even more.

The 360 is not "blowing the Xbox out of the water completely." It's a mere 3 million ahead of where the Xbox was at this point in it's life time, which is pretty negligible. It would be like adding a few million more onto the total sales of the N64 or Xbox. They would both still be in a distant second place, which is exactly where the Xbox will be at the end of the generation, and that's a best-case scenario.

The 360 already had a price cut last year RIGHT BEFORE the launch of Halo 3, which is by far their biggest franchise, and it managed to extend the lead over the PS3 by......1 million units. That being said, I don't see how the effect is going to be any greater if they do the same thing for a multi-platform game. Plus, we've already seen that Europeans prefer the more expensive PS3, and Japan is a no-go no matter what they do, so it's obvious that price isn't the only place MS needs work.

Both companies are losing tons of money due to their flawed business models. MS is already more than 6 billion in debt.

Citing Sony's failed proprietary media formats doesn't mitigate that MS does indeed make mistakes(big ones in some cases), which was my point to begin with.

Your second paragraph is so absurd that I don't even know why I'm replying to it. Tons of sales? That's real funny. After a year on the market, it had all of 6 million sales. Even this year, with a price cut and the release of its biggest franchise, it still only managed 8 million sales, and from the looks of things, it's never going to sell much more than that in a given year as the sales rate of a console is pretty much fixed after its second year. Its sales are moderately decent in one market while poor in the others. They weren't making any profits either, and I don't know what's going on in your head to make you post that. They had one profitable quarter, which was most likely due to Halo 3. The Xbox also had a profitable quarter when Halo 2 launched. Like I said, that lead it has over the PS3 is only there because of the earlier launch. The difference in sales between the two since the PS3 released is rather insignificant. Anyway, the point is that MS has really fucked up with the 360's pricing. The fact that it's still above mass market price point after more than two years on the market should tell you that.

 As for the software line-up, like I said, the 360's most prominent titles are shooters, racing sims, and sports games. It has titles in those other genres, but they're really nothing to write home about. Basically every RPG attempt on the 360 has been an unmitigated failure as far as sales are concerned, and after two years on the market, it hasn't a single prominent platformer, action game, fighting game, or offstyle racer to its name.

MS has not improved its standing in the market at all. The 360 will end up in the same position as the Xbox, a distant, unprofitable second.

 One year ago a 1 GB SD card cost $50, now they are $6. HD's cost a lot to make, memory does not, it just cost a lot to engineer.

today a 2.5", 32GB SSD is $200 (down from $450 6 months ago). The Drive in the Apple is 64GB (1.8" however). In two years I am sure we will be up to 512 Gig SSD's (we have 128's now).

It might not be $40, but I bet under $100, down from $1000 is probable.

Anyway, we are not talking about SSD's, we are talking the PS3. Sadly, it will not drop near as much. But it should drop a lot. Anytime you put R&D into a something, you then factor the cost of in across the manufacturing of it.

So if something cost 50 million to develop, and you want to make that cost up in 3 years, and expect to sell 20,000 of whatever you designed, you tack $2,500 onto the cost of your first 20k Units.

That's where a lot of the $800 for the PS3 comes from. It's not real manufacturing costs. A lot of R&D went into the CELL and the BD components. Once those dollars are accounted for, the cost of the parts goes way down.

It's why a 50" Plasma that cost 20,000 new, now cost 2,000. It doesn't really cost $18,000 less today to make one.

Anyway, I still think Sony will drop it by $100. Mainly because MS is going to make them. 

While I agree with parts of what you are saying, that $800 estimate was pure hardware cost, no R&D included.

 If you paid $50 for a 1gb sd card a year ago then you got ripped off. I bought a 2gb sd card for my camera a little more than a year ago and it cost about $25-$30 w/shipping. There is no way prices for SSD drives will drop by how much you say they will.