Agreed, if there is a big price disparity between new 8th and 9th gen hardware.

We didn't really see that with 7th gen specs. Sales dropped fast and support didn't last as long as I expected given the userbase size.

I'm really hoping the Xbox Lockhart (low end model) is X1X levels of GPU power along with other modern specs. I don't think that's asking for too much in a $299 console in 2020. Probably not relevant, but we're seeing lots of deals for X1X averaging $350.

I don't think I would even buy the Lockhart if its 4TF as rumored, I can't go backwards. We might be in situation where X1X games look better than Lockhart games!

We also had a $499 and $599 PS3 and then a $399 PS4.

I'm just saying the reason PS isn't lowering the price is mostly because they don't feel the need to, not that they can't. The fact that MS is doing so and by considerably less, with games included, means PS is selling enough and making enough, they see no reason to lower the price. However, PS knows they can't hold that price forever, and they also would like to keep making money on the hardware for as long as possible, so creating a PS4 SS makes sense. When sales finally start to drop off consistently, they will have a cheaper console to be able to drop the price and meet all of their targeted goals going forward.

PS isn't worried about a price war, if anything MS is, because when PS4 drops in price, it will likely lead to an XB1S(ADE) price drop, less sales, and less profits. MS is also indirectly influencing PS to drop PS4 prices by offering the SAD edition for $50 lower than the XB1S msrp, which is the same as PS4 now. Prices have to be dropped to continue momentum or to compete, and while PS is willing to give up a little bit before they budge, they won't let sales slip too far without doing anything about it. As for 7th gen, you have a point, considering how expensive PS3 was to manufacture. A price war would hurt PS then and MS wouldn't mind keeping their prices higher than they would otherwise, because it would mean more profit for a time. Until of course sales started to decline because that market had become saturated, so then prices would need to be dropped regardless.

That expensive manufacturing problem doesn't exist today due to the hardware used in both consoles this gen, so the only market factor holding the PS4 price up so high is PS4 sales momentum. When that momentum continues to slip as it has been, PS will eventually lower the price, new model or not. As long as companies see worthy potential growth, they will go after it, and $249 and $199 will no doubt lead to continued growth in sales for PS4 hardware, with lower profits for each one of those sales, yet higher profits overall at the end of the year. With PS5 likely a year away, PS isn't going to allow the momentum they've built up since 2013 to dwindle and hinder their next gen launch.

The problem I see with killing off the XB1S, is that all MS would have left is the SAD edition. That console requires decent internet, and the lower you have to drop the price to sell it, the less likely those buyers are to have worthy internet to use it. It's right back to Mattrick all over again. If you don't have good enough internet, then buy a 360. If you don't have good enough internet for the SAD edition, then buy a PS4 basically.

The multiple SKU thing didn't work for Sony when the PS3 launched, and there's zero evidence or rationale to believe Sony will try that again with the PS5 - especially when you consider that the single SKU selling statistics for the PS2 & PS4 were VERY strong.

Oh and the PS5 won't be $500, that's equally stupid to assume as well. Because like the multiple SKU tactic - they tried a high price point and that failed too. There's a high probability it'll be $450.

A $350 PS4 Pro/$250 PS4 price cut announcement is gonna happen in several weeks for North America and EU territories. (The Pro is already $350 in Japan)

The multiple SKU thing did work very well for Microsoft when the Xbox360 launched: they could advertise with the low entry price of the Core version and there were enough incentives that most people bought the Premium version instead.

The problem of the PS3 wasn't the two SKUs... the problem was that even the cheaper SKU was much more expensive than the Premium Xbox360 while performing worse in comparable third party games and almost no good exclusives in its first year. 

There's zero evidence or rationale to believe that there is a causation between the number of SKUs and the success of a console.

High sales made Sony delay another PS4 price cut for a lot of time, but with sales finally starting dropping more significantly than last year, a price cut will most probably happen, next September could be the right time, and in that case MS should follow to keep XBOne alive.
But even delaying the cut longer, next year it will be absolutely necessary, so when 9th gen launches, at least base 8th gen models will have a substantially lower price than 9th gen, even base ones. Old gen will target a different potential user base and it will make sense to keep it on the market for a couple of years.
Obviously old gen production will gradually drop, and when 8th gen SW sales will have dropped a lot, then HW production will finally stop.
Except for consoles that were utter failures and were immediately killled, it's the same thing that always happened to old gen at every new gen launch.

I'm not sure what your point is exactly, the PS3's high price was objectively a bad idea. Especially when you consider the 360 was doing similar visuals at a lower price.

You don't have to defend Sony, I'm not suggesting they don't have ability to lower the price. I'm saying MS and Sony are happy to not be in a price war. The X1S Digital is almost like a niche option, the real X1S is still officially $299.

Anyhoo, the PS3 and 360 were expensive until the end. I suspect 8th gen could continue that trend.

Any chance Sony will make low and high end hardware as MS is rumored to do?

If so, the Pro doesn't need to exist anymore. While PS4 could thrive IF it becomes really cheap.

Agree. While new gen leaves a lot of room in the market for a cheap old gen base version, the Pro potential user base left at next gen launch will move to next gen either immediately or anyway so soon to make not worth continuing production. The only other possibility, but very unlikely, would be that the Pro price drop enough to keep it in the market as entry level PS brand model and drop old base model production completely. Very unlikely, although less than the same happening for XBOneX, as PS4 Pro is a simpler, less powerful and less expensive to build pro version.
About MS, a cheap diskless XBTwo would leave room for an old cheap base XBOne anyway, as diskless requires a fast, smooth, very low ping and reliable internet connection, and this is just a dream, and it will remain so for a long time, for a very large part of the user target.

PS5 hardware BC does mean that I'm skipping buying a PS4 entirely. I've been planning to wait until the PS4 was sufficiently cheap enough, but now I'm just going to wait until PS5 is cheap enough and pick up all the PS4 titles I missed out on.

That said, I think I agree that a PS4 base model (maybe a cheaper-to-produce PS4 Mini) will continue being sold at budget prices, while the high end production moves on to PS5. Fully agree that PS4 Pro's market will be 100% moving on.