In case you guys didn't read past the OP, this is the best answer.  To quote another who also thought this, "/thread"

I bought a PS4 for $330 USD over the holidays. It's really not hard to get one for ~$350 if you keep an eye out for deals. Just because it's not an official sale doesn't mean you can't find it on sale.

Edit: Newegg has it on sale right now via eBay for $350.

http://www.ebay.com/itm/381043320547?rmvSB=true

or because when you project to sell 2 million consoles, every dollar you discount is 2 million dollars less in revenue.

Sony could've cut price and beat Microsoft, but they didnt need November and December because they won the year. They gave both months to Microsoft. I believe they reported that Microsoft's sales just dropped again. Halo cannot come soon enough for the Xbox.

I think Sony didn't need to. By the end of the holidays, supply was low. Unlike the Microsoft, Sony had to meet demand world wide. They failed as some countries like Germany were sold out. Inventory was also low in the US, so what could would a price drop do if you were already close to selling out and in other countries sold out. 

Sony increased manfucatoring capacity to have the inventory on hand to combat Microsoft next year.

Indeed. Why in the world would you lower the price of something that's selling well?

Even considering that makes absolutely no sense from a business standpoint.

^^^ This is very true.

When you lead the way it's easy to stick to your road map. On the flip side the X1 has strayed drastically from their original road map. I doubt they planned to drop Kinect and be selling $50 cheaper than the competition just to compete.

...

http://en.wikipedia.org/wiki/Supply_and_demand

You're way over-simplifying things.

The PS4 is already selling very well at $399.  It would only be worth it for Sony if cutting the price resulted in much greater sales.

PS4 sold 5 Million units at full price in Nov + Dec.

For example if a $50 price cut, they would lose $250 Million income that they would've got from those 5 Million users anyway.  If the cut gives them say 20% boost (1 Million users) then each user would need to generate $250 each to break even (not revenue but profit) which is a lot.

A price cut makes sense when it would give a very big boost.  XB1 was giving like $100 if not more in discounts, so when you think about the overall cost vs return then those extra sales in Nov & Dec won't easily pay for themselves.  It's worth it for MS because it's bad to be falling behind PS4 sales, which would snowball into less developer support and less networking effect for XB1 over time.

True but you have to also balance it out.

They know how many games the average consumer buys, they the percentage of consumer that sign up to PS Plus. They know what he average consumer spend on movies from their store and PS Now. Basically they know how much profit they can gain after they sell a PS4.

They then have to weigh up if dropping the price to make less profit per unit will bring in enough profit with the increased install base to make it worth it.

eg.

PS4 sells 1M at $400 for the year (small number to keep it simple). Sony make $50 profit per console, average consumer spends x amount to profit Sony $50 a year= So they will make $100M for that year.

PS4 sell 2M at $350 but make no profit per unit. Average consumer spends x amount to profit Sony $50 a year= $100

That extra install base will also continue to profit Sony $50 a year per unit sold. That 1M extra gained from price cut will give Sony $250M profit over 5 years for the sake of losing $50M on price cut.

It's a little more complicated than that but it shows that selling for less can benefit you.

At the moment, I don't think they can even entertain that price cut decision because of the lack of units.