I think it will break the sixteen week streak. I guess MS doesn't want the PS2 to outlive the 360 in that region.

If Sony reacts, then like some said, MS will just be in a worse position there than before as far as gaining market share. The sleeping Giant that woke up in October 2007 would just get much more angry.

If this leads to a EU PS3 price cut, Xbox is stuffed

Microsoft has no good choices here. They're caught between the Beast of BluRay and the Wii's blue ocean sea, and they have noone to blame but themselves. A price cut won't give the 360 next-gen media capacity or a replaceable hard drive, and won't repair the breach of trust that RRoD caused with East Asian and EU consumers.

If Microsoft cuts its price, Sony can easily respond with its own $50/50EUR price cut, right in sync with GTA. Sony's cost reduction machine is on maximum overdrive, demand for the more expensive 80GB models is strong, the Beast of BluRay reigns supreme over the mediascape, and they're making ridiculous amounts of money on their EU sales.

If they also drop the price in NA, then I think the 360 will outsell the ps3 worldwide until MGS4 hits.

A 100€ price drop on the premium and the removal of the core sku would be enough for me to go buy one right next week

Wow, cheaper than Wii? That's.. unexpected? Still, doesn't bode well for MS. Sony neither, seeing as they'll probably follow suit and they're already losing massive amounts of money.

@Cheebee: I don't think that would be unexpected. It has been pretty obvius that Arcades price will drop below Wii, before Wiis price will drop. And i actually find it interesting to see, that how 360 starts selling, in comparision, after being cheaper than Wii. And i don't think Sony is losing money in Europe, where PS3 is so expensive.

@people who wait for Sonys response: I see PS3 pricedrop earliest at GTA4 launch, but assuming that the pricedrops would lead Nintendo to offset Wiis price in Europe, we could see 199€ Wii, and Nintendo would still be making as much money per unit sold in EU, that they do in the NA. And Nintendo would again have the price advantage.

You said this year my friend, not two month :)

 Well as I said, for me it is a exchange rate price in. I don't think they will drop the price in U.S. for at least another 2 month, possible more.

On Sony front, I expect a price cut start of next fiscal, meaning April-May. Maybe it will be June, seeing how good the PS3 is doing right now. About $50. If not that, then $100 and a slim edition by November. New processors (45nm) will come this year, and this will lead to a pricecut.

All I'll say is that a £240 Elite, if true will have me very VERY interested!

I've been putting off buying a 360 for price drops and increased reliability (and upgrading my PC first!) but if these rumours turn out to be true, I think it'll be the price in which I finally step up to the plate and buy one!

That and the fact I just got a job :D Woo!

In mainland Europe, this will make little impact. They are already buying the more expensive PS3 over the 360, price reduction might help it but won't save it.

In the UK it might but 50Euro is only like £35 as stated, if they reduce it by £50, that seems a desperation to me, £25 is more likely in the UK.

And after all this, Sony could just announce a Price reduction of £25-50 in April and sell thousands come the launch of GTA4. Though they'd be losing money still, they lost money on the launch anyway, don't think they'd mind.

A price reduction on the PS2 would be fantastic £50 for a PS2? It'll sell millions more.

EDIT: @MrMarc

£240 Elite? It  says 50Euro not £60. Although if they do, it would prove a huge boost to UK sales.