The 360 will probably drop to 200/300/400 by the end of the year (I'm thinking it'll happen at E3, tbh), and the ps3 will probably drop to 350/450 in response a few months later.

Also, the 360's price will only come down in NA. It's price is already extremely low in both the EU and Japan.  The EU had a price drop just before GTA hit, remember.

As for the ps3's price cut, I could see it being exclusive to NA as well.

$50 price drop across the board in NA would be more reasonable. $100 price drop is too much and would result in losses.

 i think sony said that they wont drop the price this fiscal year

i would have thought that ms would have done that at the beginning of the generation, but not any more.  ms has realized 2 things: they can make a profit and nintendo means business.

as much as ms wants to take the wii's thunder, it knows it cant without the software to back it.  ms would need some kind of miraculous casual type game released this year to drop to 200.  ms cant bleed ninty dry, so the price war here is pointless since ninty has full ability to drop the price when they feel like it and still make buckets of cash.  sony didnt have that option, so ms tried it.

everyone has a very different situation to deal with: ms-brand name, sony-price and big names (started), ninty-wooing the hardcore.  ms now wants to be a casual machine, but its a hardcore machine.  if it ventures too far out ms might alienate both audiences instead of just one.  sony is in the case where it is a casual and hardcore brand, but doesnt have hardware or software to appeal to casuals yet (emphasis on yet, because they can and probably will to at least some extent).  ninty is pure casual, but is the perfect company to capitalize it.  they are dependant on first party and big third party names once in a while, and their games have a general easy going feel.  this has left the impression that they ignore the hardcore (im not getting into that)

 didnt sony say that they dont wanna drop the price of the ps3 this year?

yeah, I guess they would do a price cut too if the 360 starts outselling the PS3

Microsoft wouldn't drop the price that agressively unless they can expect several of the following.

1. A high uptake of Xboxlive gold
2. A wider variety of games to take advantage of the drop.
3. A competitive advantage that they feel they can leverage over both the PS3 and the Wii. This leads back to games for the most part.
4. That the end result will payoff in a profit long term. This leads back to A/B.

A price cut of that nature would crush the PS3 and they would probably start going toe to toe with Nintendo. Of course Nintendo will make 10x-100x-infinity more profit than Microsoft, so don't worry guys.

it will make impact in us but not europe.

Brute, Sony also said that home was going to be out "soon" back in March. I love the Playstation brand, but never trust anything they say. Sony The company and it's investers are used to looseing large sums of cash on the playstation brand early on in a generation and then recouping it on the backside. I am sure they would rather not drop the price if at all possible, but I guarentee you if they felt they had too they wouldn't hesitate. Sony will do what it takes to get a userbase large enough to recoup profits through software sales. I'm sure if they feel the need they will drop.

They should get a price cut too