99$ to 150$ is what consoles should cost after a few years on the market!

Once the generation is over, I could see the PS4 and the XBox One (especially the PS4, unless they make an Xbox One slim model that removes the cable box components) going for a hundred bucks. The parts are much less specialized for this generation than last generation, which means their prices will drop much more precipitously.

It's also one of the reasons that I believe the PS4 could have PS2-like legs.

Prices will drop fast. especially for the PS4. Typically MS will follow suit to at least stay competitive. 

This is due to 2 factors. First the cost of production. Even at $300 chances are that Sony are making a profit on every console sold. When the dies shrink, the cost of production drops significantly too. Basically, shrinking to 14/16nm from the current 28nm, the amount of silicon used to make one chip would make 4 chips. This whole process can happen a lot quicker because the chips in both the X1 and PS4 are APUs. 

The second factor is the effect of a larger install base. Say in the fall of 2016, each PS4 cost Sony $200 to make but they choose to sell it at $300 and make a $100 profit on each console sold and sell 18M consoles in the calendar year. They would have made more money from selling software and accessories if they dropped the price to $200 and sold 25M consoles in the year. Simply put, there is more to make from software sold to a larger install base than from just skimming profits off the top of overpriced hardware. 

What's really interesting, is that with an install base of about 52M which I expect the ps4 to be at by the end of next year, Sony could even afford to sell the ps4 for $150 taking a loss of $50 on every console sold knowing fully well that their install base would more than make up for it. 

Well, sure... They want to grow HW sales, but there is no point in cutting to a point that expected sales growth can't be met by production increase and SW sales to balance on a bigger overal profit. So you are right as well.

The superior product (1TB) attracts those that want the best.
The inferior product (500GB) attracts those who are price sensitive thus pushing the price further down (<$250 with a bundled game). 

When the original 500GB model are sold out, a slim version will be introduced at $300 but soon will go down in price and will sell close to $200 during Black Friday 2016.

IMHO

The 50USD for the drive difference isn't worth it (but seeing how they suceed on that in cellphone bussiness it may work), but it sure is interesting to have options for people on smaller budgets.

PS4 and Xbox One will get to $199.99 for sure... maybe lower. Wii-U will probably only get cheap when production has ceased and they need to sell off inventory.