Price is one of the factors that influences how well a system sells but it is not the only one, and it is far from the most important factor. How changing the price will impact each system is largely dependant on how this new price relates to the value of the system in the consumer's eyes; if you bundled another game and an additional Wiimote and Nunchuck with the Wii for $199 it could easily be seen as a far better value to many consumers than a $199 PS3.

The general health of the system is another important factor. People generally buy a system for the games that are readily available as well as the games that are going to be released in the future. If one (or several) equal or better game(s) are started as a game is released for a system you could say that it is generally healthy, in contrast if exclusive games are replaced by multiplatform games and (many) multiplatform games leave your system then you could say that the system is generally unhealthy. This "Healthy" of a system is related to hardware sales, the system that is selling better generally has an easier time attracting new software development to it; in this generation it should be interesting to see how the cost of development will factor in.

Most to gain by a price cut? The PS3 by far. Right now the Wii is pretty much tapping it's stock week after week and even if they dropped the price to $100, they can't sell more then they produce and are usually selling close to what is available in all sales channels every week.

The PS3 though, if the 40gb was $300, it would become affordable to far more people and since PS3 is not selling out it's entire stock right now, it will just improve for them as they have the units in the sales channels to push out more that can afford the $300 price range.

360, well, it would get better, but not as much as the PS3 would be. Already the PS3 at a higher cost is outselling the 360 WW, and if the PS3 were even less, sales would slide more into Sony's favor.

For the time being, a price cut will only help the 360 and PS3.  It would not surprise me to see these systems drop in price later this year.  Anytime you drop the price on a system, there will be more people willing to buy it.  If I had to pick one, I'd say PS3 would probably have the most to gain.  At the current high price, it could certainly use one.

As Nintendo can't meet the current demand as it is, they would be crazy to cut the price anytime soon.  I don't expect them to until sometime next year at the earliest.  They are, however, in the best position to do so as I bet they could easily drop the price to $199 and still make a profit on hardware.

A price cut on the Wii right now would be a bad idea; it's already dealing with a shortage, and making it even more affordable would increase the shortage. The word from MS is that the 360 is also having a shortage (though given their sales level, that would be due to a drop in production rather than actually selling out), so a price drop there wouldn't be a good idea either. And an argument against a PS3 price drop is that they're still loss-leading; losing even more money per hardware unit would not help them.

I cannot come up with a compelling argument for dropping the price of the Wii. The 360's sales have been in a slump, so a price drop could help them. As for the PS3, right now I think the main barrier to its success is its reputation more than its price.

Why did KGB give the PS3 a $100 price break and the 360/Wii a $50 price break?

i know people want price cuts all the time but there is a reason the ps3 launched at $600. it's expensive as hell ($840) to produce. i know costs have gone down over the last year and a half (as is bound to happen) but i can't imagine the high end ps3 costs less then $600 to produce.

i think a price cut at this point would be bad for sony. constantly price cutting ends their chance of ever turning a profit on this console. and let's face it, the ps3 isn't selling poorly at the moment, it's just the wii is selling like mad.

No question the PS3 wins in that scenario. The Wii sells out anyway, so Nintendo looses, as they sell the same amount and make less money.

The PS3 is outselling the 360 everywhere, and cost a lot more. You Scenario has them at the same price for the unit with a hard-drive. That's a win for Sony.

I think PS3 will gain the most.

But, let's face it, with the way US dollars sinking, don't expect price cut from Sony or Nintendo anytime soon. Their revenues went down 10-20% (after convert to Japanese yen), not because of selling less consoles, because of the falling US dollar. That pretty much takes away all the price cut potential.

 OT:Yah Sony would benefit most from the price drop. A 360 price drop probably won't have that much of an impact outside NA. (maybe not even that much in NA considering how many games are coming out on PS3 vs. 360 in 08)  Nintendo doesn;t need to drop the price when they can't even keep up with the demand in March, let alone October or December. They'd just be throwing money away. otoh, a $300 PS3 would pretty much put the nail in the coffin as far as Europe is concerned and seriously erode the 360's lead in NA. Also, HD junkies would swarm on a $300 BD-Live player like there's no tomorrow. (not that that would help Sony's gaming division much, but it would help bring costs down by increasing the number of consoles moving through the assembly lines.)