I was watching a report on BBC World yesterday talking about Nintendo. One of the big points they made was that Nintendo gets less revenue from American sales because the US dollar has dropped 20% compared to the Japanese yen in the past year (along with the fact that the Wii price hasn't increased 20% to make up for the weakening dollar). Not sure where all the materials and labour for Sony's PS3's or MS' 360's are from, but I expect a lot of both are from outside the US. Given that, both companies are likely seeing less revenue (compared to costs) also. I am not certain either of these two companies will want to lose more revenue in 2008 beyond this likely large percentage...

I can't see how Nintendo or Sony can afford to drop prices. Nintendo lost $900 million because of the Yen/Dollar exchange rate.

MS however doesn't have to worry bout the Yen/Dollar rate. They probably have to worry a little about the Yuan/Dollar, but I don't think that has gone up as much as the Yen/Dollar.

Crappy dollar FTW!!!

I think a lot of countries are pegged to the dollar since so many sell so much stuff to the US. China and Japan are big, along with Mexico and other Latin countries that companies export factories to.

With MS only raking in 89million in the entire entertainment division I think it will be awhile before the 360 and ps3 get a price slash in america.

The Yuan is allowed to float against the dollar to an extent, and is at record highs, but it's still not fully floated. As pointed out already, it hasn't appreciated as much as other Asian currencies which are fully floated.

Still, whilst the 360 is manufactured in China, many of the compononts come from other Asian countries, so the weak dollar affects Microsoft too. Also, the companies that manufacture the 360 aren't Chinese either, they're Taiwanese and Singaporean. Both of these currencies have significantly appreciated against the dollar too.

Clearly the weak dollar affects Microsoft less than Nintendo or Sony, but it's still a pretty significant factor, and is why Europe has seen price cuts and NA hasn't.

 Selling stuff to people in the US is not the reason for this.

I can still see a Microsoft drop in 08.
Look for this to happen around Christmas

Sony will likely counter with competitive sku's and bundles, but I would imagine the lowest priced PS3 to still be $400.

I'm pretty confident Microsoft and Sony will both drop the price come the holidays. Nintendo probably won't need to.